Ghost Broking: The Insurance Scam You've Never Heard Of

How AI-powered fraud prevention is turning the tables on insurance's fastest-growing scam

The insurance industry has always been built on a simple promise: trust. Customers trust insurers to provide financial protection when disaster strikes, while insurers trust customers to provide accurate information about their risks. But the foundation of that relationship is under attack like never before.

Ghost broking cases, where scammers pose as brokers online, jumped 24% last year in the UK, with social media scams alone doubling and leaving victims nearly £200,000 out of pocket. Although one in three young drivers have unknowingly purchased fake insurance online, very few people know about ghost broking.

This isn't just another fraud trend—it's a sophisticated attack on the entire digital insurance ecosystem. And it's accelerating fast.

What Is Ghost Broking?

Ghost broking sounds like something from a Halloween story, but it's a very real and growing threat. Ghost brokers are fraudsters who pose as legitimate insurance representatives to sell fake or invalid insurance policies, often targeting price-sensitive customers through social media platforms.

The scam works in several devastating ways:

Falsifying applications: Ghost brokers submit fake details, like changing an applicant's address or age, to obtain cheaper policies that become invalid the moment false information is detected.

Falsifying applications: Ghost brokers submit fake details, like changing an applicant's address or age, to obtain cheaper policies that become invalid the moment false information is detected.

Forging documents: They create entirely fake insurance certificates that look authentic but provide zero coverage.

The disappearing act: Ghost brokers take out genuine policies, collect payment from victims, then cancel the policies and pocket the refund—leaving customers unknowingly uninsured.

Of young drivers who purchased car insurance via social media, 89% experienced serious problems with their policies. The victims often don't discover the scam until they're stopped by police or try to file a claim, sometimes after accidents when they need coverage most.

Why Ghost Broking Thrives on Social Media

Ghost broking thrives in today's digital world for several reasons. Young drivers aged 17-25, the first generation to grow up with social media, naturally turn to these platforms when shopping for insurance, with 30% using social media to find coverage. Meanwhile, fraudsters have stolen $2.7 billion through social media from 2021 to 2023, far more than any other contact method.

The math is simple: high insurance costs + social media advertising + low awareness = the perfect conditions for fraud.

Ghost brokers specifically target unsuspecting victims through Facebook, Instagram, and WhatsApp, focusing particularly on young drivers who may be unfamiliar with how to verify a broker's legitimacy. The promise of dramatically lower premiums is irresistible to someone facing sky-high insurance costs.

But the consequences extend far beyond individual victims.

The True Cost of Ghost Broking

While victims bear the immediate brunt like facing fines, penalty points, vehicle seizure, and potentially devastating financial losses from uninsured accidents, the damage spreads throughout the entire insurance ecosystem.

Industry-wide impact: Insurance fraud costs the UK industry over £1.2 billion annually, adding an estimated £50 to the average policyholder's premium. In the US, the average family pays $400-$700 extra each year because of insurance fraud.

Resource drain: Aviva alone detected an 18% increase in ghost-brokered policies in 2024, linking an additional 8,600 cases to open investigations. This massive investigative workload diverts critical resources from legitimate customer service and claims processing.

Trust erosion: Every ghost broking case hurts public confidence in digital insurance channels, potentially driving customers back to more expensive, traditional methods.

The scale is staggering. City of London Police's recent nationwide crackdown resulted in 438 arrests and asset seizures of approximately £19 million, with the Insurance Fraud Bureau detecting a 52% increase in ghost broking activity from 2022 to 2024.

Why Current Detection Methods Aren't Working

Here's where things get complicated for fraud prevention teams. Ghost broking isn't like other insurance frauds that follow predictable patterns. Traditional rule-based systems that look for specific red flags often miss these schemes because they're designed to mimic legitimate transactions.

The shift toward AI solutions isn't just a trend, it's becoming a necessity for insurers to stay competitive, with state-of-the-art fraud management solutions improving detection rates by 15-20% while reducing false positives by 20-50%.

The challenge is that ghost broking operates in the gray areas between legitimate and fraudulent behavior. Applications may look normal on the surface, with all required fields completed and reasonable information provided. The fraud often lies in subtle manipulations, a slightly adjusted address, a marginally different age, or credentials that seem valid but aren't.

This is where specialized technology and expert analysis become critical.

The Alorica Approach to Fraud Detection

Our approach includes:

Behavior analytics: We analyze how people fill out applications and move through our systems to detect when fraudulent brokers are involved. This includes everything from typing patterns to navigation behaviors that suggest someone other than the applicant is involved.

Network analysis: Ghost brokers often operate in connected networks, using similar methods across multiple victims. AI systems excel at identifying these connection patterns to find entire fraud rings rather than just individual cases.

Real-time detection: Machine learning models can spot irregularities in patterns weeks ahead of traditional approaches, helping identify potential fraud earlier in the process.

But here's what makes us different: we don't just install the tech and leave. Our fraud experts work hand-in-hand with AI systems to keep making them smarter, handle the tough cases, and adjust when scammers change tactics.

Better Together: The Alorica + Pasabi Partnership

Ghost broking isn't just about the data submitted in applications. It's about analyzing the entire user journey, from how someone navigates to an application to the subtle behavioral patterns they exhibit while filling out forms.

At Alorica, we've learned that stopping ghost broking requires the right combination of AI detection and human intelligence working together. This is where our partnership with Pasabi comes in.

While Pasabi brings powerful insurance fraud detection software, Alorica has highly trained experts who can interpret complex results.

Together, we create a comprehensive defense system:

Pasabi's specialized detection uses advanced behavioral analytics, network analysis, and continuous learning capabilities that adapt to new fraud methods in real-time.

Alorica's AI expertise enhances these detections by identifying ghost broking signals through a holistic approach to data analysis and examines both application data and user journeys to uncover fraudulent activity.

This ensures that sophisticated edge cases get the expert analysis they need, while obvious fraud gets handled automatically.

The result? Insurance companies get real-time analysis and proactive responses faster than traditional methods, offering quicker resolutions that keep their customers protected and happy.

Don't Let Ghost Brokers Target Your Customers

Ghost broking isn't going away, it's evolving. Rapid developments in AI are likely to increase instances of ghost broking, as fraudsters get better tools and smarter techniques, they'll become even more convincing at tricking people.

The question isn't whether your business will encounter ghost broking attempts. It's whether you'll be ready to stop them before they damage your customers and your business.

If you're ready to see how Alorica can help protect your organization, whether through partnerships like ours with Pasabi or working directly with us, let's talk. When it comes to fighting ghost broking, having the right partners makes all the difference.

Contact Alorica today to learn how we can help strengthen your fraud prevention and protect your business.

Alorica is a global leader in customer experience management and AI-powered fraud prevention, helping organizations detect and prevent sophisticated fraud schemes while maintaining seamless customer experiences. Learn more about our Digital Trust & Safety solutions at www.alorica.com/digital-trust-safety.