Ghost brokers use AI to create fake policies, leaving drivers unknowingly uninsured
Fraudsters are now using artificial intelligence to generate entirely fabricated motor insurance policies, bypassing insurers altogether and leaving drivers with worthless cover they believe is legitimate.
The Insurance Fraud Bureau tracked a 52% rise in ghost broking cases between 2022 and 2024. Aviva recorded a 22% increase since 2023. Research from the Financial Conduct Authority in May 2026 found that 49% of young drivers purchased insurance through social media or messaging platforms, while four in 10 said they could not confidently identify a fake policy.
From altering policies to fabricating them entirely
Ghost broking has existed for years through fronting and policy manipulation. What's changed is the method. Rather than altering genuine policies, fraudsters now create entirely fictitious ones using generative AI and LLM technology.
The schemes began with stolen books of cover sold in person, migrated to social media and messaging platforms, then evolved again in late 2025. Fraudsters now use portal templates that replicate across multiple operations, making sophisticated schemes easier to scale. These portals can appear convincing enough to pass initial scrutiny before exposure through detailed checks by insurers, law enforcement or industry databases.
Katriona Cunningham, Underwriting Fraud Lead at Aviva, described the mentality behind these operations: "I consider my job to be selling car insurance online as a legitimate career."
The cost to victims and the wider market
Consumers caught by ghost brokers lose around £2,000 on average. That includes approximately £1,700 paid to the fraudster and a further £300 in fees. One suspected ghost broker identified by Aviva generated around £150,000 through fake motor insurance sales alone.
The consequences extend beyond individual losses. The Motor Insurers' Bureau provides compensation for victims of uninsured driving, with funding drawn from the wider insurance market through industry levies. Legitimate brokers also compete against fraudulently low prices that carry none of the costs associated with underwriting, regulation or claims obligations.
In one case in Northern Ireland, a young woman who believed she had purchased legitimate cover was prosecuted for driving without insurance after the broker disappeared. "The outcome being that she's then prosecuted as being a victim of fraud," Cunningham said.
Who is most vulnerable
Around 15% of young drivers say they cannot afford legitimate insurance. First-time buyers and newcomers to the UK are particularly vulnerable to ghost brokers, with social media becoming the primary route through which fraudulent offers reach consumers.
Cunningham noted how social media algorithms work against consumers. "If you're looking at car insurance, that's what's then popping up on your social media feed. I trust that when I order my skincare via Instagram, it arrives at my door. Therefore why would it not make sense if I'm seeing car insurance that's a better deal?"
She advises treating unusually cheap insurance quotes with the same suspicion as heavily discounted luxury goods. If a policy appears significantly cheaper than the rest of the market, it may be too good to be true.
Enforcement challenges remain
Emma Fuller, Partner at DAC Beachcroft and member of the Motor Sector Focus Team at the Forum of Insurance Lawyers, said enforcement is difficult. "Although more can be done to prevent ghost broking, enforcement is unfortunately challenging. Fraudsters operate across multiple platforms and frequently change identities. Once they have sold a few policies, they often disappear, but will resurface in another form."
Mark Hemsted, Partner at Clyde & Co, said regulators are likely to expect firms to actively reduce the risk of harm. "If high premiums and complex products are driving consumers towards illegitimate channels, regulators are likely to expect firms not just to reject claims after the fact, but to show they have actively reduced the risk of harm in the first place," he said.
What the industry is proposing
Cunningham has called for a combination of stronger enforcement, tougher penalties and greater public awareness. She proposes that social media platforms restrict insurance advertising to FCA-authorised firms and that insurance fraud education be added to schools and driver training.
She made a specific proposal: adding a question on purchasing legitimate car insurance to the UK driver theory test. "It would reach first-time buyers at exactly the moment they need the guidance, before they encounter fraudulent offers," she said.
The challenge for the industry is that AI for insurance fraud appears to be making the problem easier to scale. Fraudsters who disappear after a handful of sales can quickly resurface elsewhere under a new identity. For consumers, that often means discovering the fraud only when they attempt to claim, are stopped by police, or find themselves prosecuted despite believing they had purchased legitimate cover.
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