NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In

Advertisement
Advertise with NZME.
Premium
Home / Business / Personal Finance

Ghost broking: The latest insurance scam you need to watch out for

Tamsyn Parker
By Tamsyn Parker
Business Editor·NZ Herald·
15 Oct, 2020 04:37 AM7 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Ghost brokers are selling fake insurance using social media in the UK. Could it happen here?

Ghost brokers are selling fake insurance using social media in the UK. Could it happen here?

People left in a financially vulnerable situation from Covid-19 could be at risk of falling for ghost broking - a type of insurance scam where people posing as brokers use social media to sell fake insurance policies at a cut price.

That's one of the types of fraud worrying insurers, according to a UK expert who dialled in to speak at a webinar on fraud in times of recession hosted by the Insurance Council of New Zealand last week.

Stephen Dalton, head of intelligence and investigations at the Insurance Fraud Bureau in the United Kingdom, said insurers there had yet to see a rise in fraud as a result of Covid but they were expecting it.

"The view is from insurers is we expect there to be a significant rise in fraud. We haven't seen a huge rise yet. We haven't seen lots of Covid-related cases, the odd one or two.

"But there is a strong expectation we are in the calm before the storm."

Advertisement
Advertise with NZME.

In New Zealand insurers have already said they are preparing for a rise in fraudulent claims.

Dalton said during its last recession in 2008 the UK saw a 33 per cent rise in the value of detected fraud and a 31 per cent rise in the number of fraud cases reported and it was estimated that undetected fraud could be a similar level.

He said there were three areas insurers were expecting a rise in fraud; vehicle insurance, domestic property and liability claims.

Advertisement
Advertise with NZME.

Ghost broking

Dalton said ghost broking of vehicle insurance was a real problem in the UK and a worrying issue for insurers.

"That is where you have individuals who will pretend to be insurance brokers and will offer their services to people and say I will use my expertise to get you a good deal. I will sort your insurance out for you just give me the money and I will get it all done."

Discover more

Business

CEOs rediscover the family dinner table

15 Oct 04:00 AM
Business

Higher Fonterra forecast means $10 billion boost for rural economy

14 Oct 08:17 PM
Business

Lender pays out $154k after wrongly forcing mortgagee sale

14 Oct 04:00 PM

Dalton said consumers received a policy document that appeared to be legitimate but the documents were false, which meant the person was uninsured.

"That is a big problem in the UK where individuals are selling their services on social media platforms."

Brokers have to be licensed in the UK, but Dalton said the fake brokers were able to get away with it even though they were not licensed.

"People will take up their services via social media platforms because they think this guy is able to get me a really cheap deal. Or they will look like they are legitimate and this is a business that is properly set up but in reality they will be producing entirely fake insurance policies."

"There is a real concern especially with a potential recession that that will be something people will be driven towards and also that those individuals will exploit people who are vulnerable."

Yvonne Wynyard, manager of the New Zealand Insurance Fraud Bureau, said while it was not aware of ghost brokering occurring in New Zealand, it did not mean that it was not happening.

"Because most policies bought by consumers are bought direct from the underwriter, the risk is reduced somewhat."

Advertisement
Advertise with NZME.

But she said if people had any doubts they should ask for the broker's details and check with IBANZ [Insurance Brokers Association of New Zealand] if they are registered.

"Because the UK is a bigger market, a ghost broker can get away with selling a large number of fictitious policies in a short space of time, before shutting down and going underground. The very few instances we do know off have been overseas brokers "selling" policies to unsuspecting individuals coming to NZ," she said.

Car insurance is open to a number of scams. Photo / file
Car insurance is open to a number of scams. Photo / file

Wynyard said people should also steer clear if the offer sounds too good to be true. She said any attempts from the broker to receive a direct payment were also a red flag.

"Make sure quotes and policy documents appear professional. If you have any concerns call the insurer, directly Google the broker, or check on IBANZ, check for professional qualifications.

"If the broker is being pushy or putting pressure on to make a quick decision, this is also a red flag."

Crash for cash

Dalton said with lockdowns easing and more people driving, vehicle insurers were expecting to see a rise in claims relating to staged accidents known as crash for cash.

This was where either both drivers were involved in the scam and would deliberately crash into each other in order to fake an accident and make a claim.

"The other way is a fraudster will go out on the road and deliberately create a collision by slamming on their brakes in front of someone and causing that person to crash into them."

If that happens, then the person who crashes into them is liable because they have crashed into the rear of another car.

"The fraudster has then created a claim and then all ancillary costs like personal injury, money for a new vehicle, vehicle for hire while car is being repaired, repairs can be exaggerated."

He said within motoring there was an expectation there would be increased misrepresentation at the application stage with more people misrepresenting themselves in order to get cheaper premiums.

"Obviously that creates a risk in the event a claim is made."

While the policyholder may have their claim turned down or policy voided because of the misrepresentation, a third-party claim could still go ahead, leaving the insurer on the hook.

Claims farming

Dalton said the other thing going on within motor insurance that was not fraud but was an enabler for it was claims farming.

This was where direct marketing companies would either ring people up or send them a text message and try and encourage them to make a claim - sometimes it will be based on leaked claims data or in other cases it will just be a blind call.

"They will ring up a hundred people in the hope they will get one or two that have actually had an accident in the last six months."

He said the direct marketers then encouraged those people to take a personal injury claim. In New Zealand that is not handled by private insurers but through ACC.

Dalton said the industry was also expecting a lot more opportunist fraud in the domestic property insurance and liability area.

"So that is one individual who has got a genuine claim or who is fabricating a claim but it is a one-off. They are not doing as part of an organised scam - they are just doing it to make some money because they just need some cash.

"There is a view that we will see a lot more exaggerated genuine losses."

That could be faking a burglary or claiming for expensive valuables that never existed.

"There is an expectation we will see a lot more of that activity."

Dalton said insurance fraud cost about £1.4 billion (NZ$2.7b) a year.

"The cost of fraud is passed on to policyholders, it is not a victimless crime. There has been a perception that because you are doing it to a business it is not really a problem."

But he said people were beginning to recognise insurance fraud actually cost them money.

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Personal Finance

Premium
Banking and finance

'Misguided stunt': ANZ declines $300m legal settlement offer

Premium
AnalysisKate MacNamara

Reserve Bank's employee benefits: Gold standard or pretty standard?

Premium
Business

Venture capital market hot again, Icehouse Ventures boss says, as new fund feeds on golden visas


Sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

Advertisement
Advertise with NZME.

Latest from Personal Finance

Premium
Premium
'Misguided stunt': ANZ declines $300m legal settlement offer
Banking and finance

'Misguided stunt': ANZ declines $300m legal settlement offer

David Seymour gets involved.

16 Jul 04:41 AM
Premium
Premium
Reserve Bank's employee benefits: Gold standard or pretty standard?
Kate MacNamara
AnalysisKate MacNamara

Reserve Bank's employee benefits: Gold standard or pretty standard?

16 Jul 03:00 AM
Premium
Premium
Venture capital market hot again, Icehouse Ventures boss says, as new fund feeds on golden visas
Business

Venture capital market hot again, Icehouse Ventures boss says, as new fund feeds on golden visas

15 Jul 05:00 PM


Solar bat monitors uncover secrets of Auckland’s night sky
Sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

06 Jul 09:47 PM
NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP