I overheard a discussion in the tea room relating to the ‘friend’ of an employee who was able to arrange cheaper insurance through contacts he had, this friend was offering to only charge if he was able to reduce the insurance premium.
One of the younger employees has asked me what I think of this ‘offer’ and is considering trying this service, what should I say?
From the information you have supplied it sounds like the ‘friend’ is not registered with the Financial Conduct Authority, ‘FCA’ or with the British Insurance Brokers Association (BIBA).
What this individual is potentially doing is undertaking a regulated activity that would require him to be registered with the FCA. If he is not registered then he will be committing an offence and could be prosecuted.
If you’re employee is in any doubt, then check the ‘broker’ is registered with the FCA to offer this service, you can do this by clicking the link.
This offer of cheap insurance sounds too good to be true, and in most cases when something sounds ‘too good to be true’ it generally is. Just this month four men from Birmingham were sentenced after a ghost-broker insurance scam was uncovered by detectives from the Insurance Fraud Enforcement Department (IFED), part of the City of London Police.
Mohammed Aquil, along with Amjad Hussain, Alwyn Snape and Anees Ahmed, conspired together to defraud insurance companies by providing false details and forged documents in order to get cheaper premiums for their motor insurance.
Aquil was making motor insurance applications on behalf of his ‘clients’ to get them cheaper car insurance deals. However, the reason he was able to get them cheaper deals was because he changed key information on the applications, such as the home address, dates of birth, or no-claims details.
He would then charge his ‘clients’ between £250-£500 for brokering the deal, but in reality, those people were holding invalid insurance because Aquil had provided false details to the insurance companies.
The scam was uncovered when investigators at Ageas noticed that three separate motor insurance policies had been taken out for Snape, Hussain and Ahmed. Common to all three policies was that their home address was in Birmingham, but the address where the vehicles were being stored overnight was stated as being at a holiday cottage in Somerset.
When asked by Ageas for proof that the vehicles were being kept at the Somerset location overnight, separate letters were sent back purporting to be from the manager of the holiday cottages stating that all three had been staying at the cottages long-term due to having jobs in the area. However, when investigators contacted the cottage owners, they stated they had never heard of Snape, Hussain or Ahmed and when they saw the letters that had been sent to Ageas, they confirmed they were forgeries and hadn’t been written by them.
The cases were referred to IFED and officers found that all three policies had been opened via the Internet from the same IP address, which was linked to Aquil and that a debit account that was used to make an initial payment for one of the policies was also in Aquil’s name.
Officers raided his home address and seized his computers and phones. When they looked on his computer, detectives found several template documents that he had used for the fraudulent insurance applications. When they examined his phone, officers also found hundreds of messages to people that he had been acting as a ghost broker for. When they carried out further checks, detectives found that Aquil had set up around 20 fraudulent policies.
Among these were the policies for Snape, Hussain and Ahmed. When they were questioned, all three admitted that they were fully aware of the false details Aquil had supplied and that they knew they would get cheaper insurance deals if they stated the vehicles were being kept at a different location overnight.
Your employee should be careful if he obtains insurance via a ‘Ghost Broker’ who may give inaccurate information to insurers to obtain a cheaper premium. Providing Insurers with inaccurate information will result in his policy of insurance being invalid. Your employee would essentially be paying to purchase cover that is to all intents and purposes worthless.
