Car Insurance Industry: Fraud

Luke Charters Excerpts

Wednesday 22nd April 2026 Westminster Hall

[Mr Luke Charters (York Outer) (Lab)]

It is a pleasure to serve under your chairship, Ms Lewell. I genuinely thank the hon. Member for North Shropshire (Helen Morgan) for securing the debate. I will confine my remarks to ghost broking, which she referred to. I gave a speech on that subject at the Association of British Insurers last year, and I have a keen interest in it, given that I had a career in counter-fraud.

The first point that I want to make is about the nature of the phantom protection that consumers so often receive when they purchase ghost car insurance cover. I am increasingly concerned about the use of AI in fabricating insurance documents. They look genuine to many consumers, so we really must ensure that there is consumer awareness around such uses of AI.

I am also concerned that, with ghost broking in particular, there are some instances where it is operating at scale. It is not just the product of a few rogue actors operating from their basements, or something like that; often, it is a systematised attack used by organised crime groups to target vulnerable groups. I will talk next about what I see as systemic predation and the predatory behaviour of some of these ghost brokers.

Let us imagine a young driver, aged about 17 or 18. They might have a little C1 or another small car, something with a 1.0 litre engine, and they might have their very first job after leaving home—a job that they depend on for their way of life and livelihood. They need that car to get to work. We all know about the very high premiums that young drivers face, so many of them unfortunately fall into the hands of ghost brokers. They face many different losses: not only the loss of their premium but, if they were to unfortunately become involved in an accident, the consequences for their personal finances. The effect of uninsured driving is very much a double whammy, especially for young drivers in such circumstances.

We heard from the hon. Member for North Shropshire that these ghost brokers increasingly operate on social media. I really believe that the Financial Conduct Authority can go further, with Ofcom and some of the social media platforms, to call out that behaviour. There is a conversation to be had about the verification process that social media platforms go through when they receive advertising revenue. Those platforms—be they Meta, TikTok or whatever—should not be making money from ghost broking ads.

The ABI was spot on in trying to create greater consumer awareness of this problem. I invite my hon. Friend the Minister to join me in saying a very common Yorkshire phrase: “If it’s too good to be true, it probably is.” That really applies to many of the policies sold by ghost brokers. The ABI has called for greater consumer awareness of the risk of ghost broking, and I encourage my hon. Friend the Minister to join me in supporting that call today.

I am concerned about the statistics from the ABI that show an upward trajectory in ghost broking—for example, there has been a 22% increase in ghost broking over the last couple of years. In addition, there are over 50,000 motor insurance scams, worth half a billion pounds in total, and up to half of all fraudulent claims could feature some aspect of ghost broking. Really staggeringly, around three in 10 young drivers have purchased insurance from illegal sellers on social media, and the average loss per victim is around £2,000, even though an annual premium is obviously less than that. This means that, for many years, many drivers have been going about on the roads uninsured.

The final issue with ghost broking that I want to talk about is the “second wave” that I have heard about anecdotally from those in the sector. Once the ghost broker is there, then, like a vampire, they have got their victim and they steal some of their identity. They then resell that identity, or part of it, for the purposes of identity theft later on. Not only have uninsured drivers, including young drivers, bought the ghost broker’s policy—that is, they lost their premium and have been uninsured; they may even have been in an accident or whatever—but some years down the line, they might become a victim of identity theft too.

We must have a conversation about having a specific offence of identity theft. Although this does not relate to car insurance, I will briefly tell Members the story of a constituent who served abroad in the armed forces and who had his identity stolen. He found out that mobile phone contracts had been taken out in his name, and I worked with him to get his credit file back on track and to get some of this expunged—some of the credit reference agencies were very slow in righting this wrong.

In the end, there was no financial loss to my constituent, but it had a big impact on his life. He was serving overseas and his credit file had been wrecked; when his partner then found a perfect family home for them, he unfortunately realised he could not get a mortgage. He had come back from deployment, and he knew he would be in the UK for a year or two, so he wanted to use that time to settle into a family home. That was his dream—he had been apart from his girlfriend for some time—but he could not do that because his credit file had been wrecked. I had to sort that out with him, and it was all the consequence of his identity having been stolen.

Identity theft is not a victimless crime. It is particularly acute when it comes to car insurance, but we must tackle it in all its forms. As part of the next iteration of the Government’s fraud strategy, I would welcome a specific offence of identity theft. The Computer Misuse Act 1990 is a broad vehicle according to some of the police I speak to, and it would be beneficial to have a specific offence of identity theft.

[Peter Swallow]

At the start of his speech, my hon. Friend mentioned the involvement of AI in this. That issue was raised with me by the Thames Valley police roads team, which said it is now quite possible for uninsured drivers to use AI to generate a fake insurance document at the roadside, and in that way to prevent the police from tackling this crime. I detect that my hon. Friend may know more about this than me, so I encourage him to say a little more about it before he wraps up his excellent speech.

[Mr Charters]

I thank my hon. Friend for drawing attention to that example. Large language models can be in one’s pocket, and such documents can be generated even without internet connectivity. When I was in the counter-fraud sector, I used some of the AI models that criminals had in order to create hypothetical, fabricated documents. My team created some of those documents—bank statements and identity documents—and showed them to me alongside real documents—and I, an experienced fraud practitioner, could not tell the difference with my eyes. We are now having to use digital tools to detect AI manipulation; sometimes the eye of the beholder is insufficient to detect that a document has been fabricated by AI. As a fraud practitioner, one has to stay one step ahead of the fraudsters. I invite the police to think about how they could do that, using AI themselves to detect documents fabricated by AI.

It has been a hearty discussion today. I call on the FCA to work closely with Ofcom and social media companies to quickly put a stop to the revenue connected to many of these ads, because that would curtail a lot of this activity. We have to have much greater verification in place when it comes to ads relating to insurance, and the social media platforms have to do something very simple: check that the originator of the ad is actually registered by the FCA.

I hope that some of these straightforward calls can be answered, and that the Minister will join me in saying that if something is too good to be true, it probably is. We need greater consumer awareness when it comes to car insurance fraud more generally.