Drivers are being urged to ensure they are choosing the right car insurance policy for them amid fears some motorists could lose thousands of pounds.
New data has found that the rate of “ghost broking” among young drivers has jumped four per cent compared to last year, with it rising 22 per cent over the last two years.
The trend of ghost broking is becoming more common and involves fraudsters posing as legitimate insurance agents selling fake or invalid motor insurance.
Research has found that young people are the most susceptible to the scam, given that they offer far cheaper rates than traditional insurers.
Motorists in the 17 to 25 age range are losing around £2,000 on average when they purchase fake car insurance policies from ghost brokers.
This is often made up of the average premium paid to the ghost broker, worth around £1,700, and £300 in extra fees.
As a result of the concerning trend, Aviva is calling for stronger enforcement, tougher penalties and better education to reduce the rate of scams.
In one instance, a suspected ghost broker detected by the insurer was found to have made around £150,000 selling fake car insurance to young people.
Experts are calling for greater punishments for ghost brokers
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GETTYOwen Morris, CEO of UK Personal Lines at Aviva, said: “Ghost broking is a fast-growing criminal enterprise that targets young drivers on social media sites.
“These fraudsters exploit social media to sell worthless insurance, leaving victims thousands of pounds out of pocket, driving without insurance, and at risk of prosecution.”
He also warned that these victims could also be targeted by criminals attempting identity of banking fraud in the future.
Almost one-third of young motorists have admitted to purchasing car insurance via social media platforms, likely increasing their risk of being scammed by a ghost broker.
Young people are most likely to be targeted on social media by ghost broking insurance scams
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GETTYOf these, 84 per cent of people aged 17 to 25 admitted to facing issues, including incorrect details (24 per cent), declined claims (24 per cent), and the seller disappearing (19 per cent).
A staggering 16 per cent said they had been stopped by the police, highlighting the serious threat faced by people opting for cheaper policies.
Mr Morris added: “The scale of the problem is concerning – and it’s getting worse. We’re calling for tougher enforcement, stronger penalties, and greater awareness of ghost broking to protect young drivers.”
To combat the issues, Aviva has pledged to work closely with law enforcement to disrupt the operation of ghost broking scams.
Experts have suggested that only FCA-verified businesses can advertise insurance products
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PAIt called for tougher penalties for ghost brokers to “reflect the harm caused to victims”, which could include the use of custodial sentences.
Aviva has also called for driving test changes to teach young people how to properly buy their car insurance and avoid scams.
Other measures could include rules for social media platforms to only allow insurance advertisements from accounts verified with the Financial Conduct Authority (FCA) to advertise legitimate services.
“Our message to young drivers is simple: Before buying insurance on social media, always check the seller is genuine before you pay,” Mr Morris concluded.