Car Insurance Industry: Fraud

Peter Swallow Excerpts

Wednesday 22nd April 2026 Westminster Hall

[Helen Morgan (North Shropshire) (LD)]

I beg to move,

That this House has considered the matter of fraud in the car insurance industry.

It is a pleasure to serve under your chairship, Ms Lewell. Before I start, I thank the Minister; the shadow Minister, the hon. Member for Wyre Forest (Mark Garnier); and my hon. Friend the Member for Honiton and Sidmouth (Richard Foord) for being here to respond to the debate. This issue cuts across several Departments, and my main ask is for a co-ordinated response to it across Government.

I will touch on many types of fraud in the car insurance industry, but I want particularly to draw the Minister’s attention to paid ad spoofing, which came to my attention after a constituent fell afoul of the scam. Because their case is yet to come to court, I cannot give any specifics of it—I can reassure you, Ms Lewell, that I have checked the content of my speech with the Clerks—but it is typical of the problem.

On its website, the Association of British Insurers describes paid ad spoofing as follows:

“Paid Ad Spoofing involves scammers who use paid advert spoof websites to appear at the top of search engines usually to trick drivers into thinking they will be directed to the website of the genuine insurer. Scammers target motorists when they’re most vulnerable after road traffic accidents. When a driver uses their smartphone to start initiating a claim from the roadside, they may be directed to the website of an unscrupulous firm instead of their insurer. Scammers will ask for personal details to provide ‘support services’ and potentially make a claim. They use psychological tactics to befriend, reassure and pressure victims, while all the time collecting personal information for financial gain.”

Let us imagine a scenario: you are driving along in a blame-free manner, and some idiot pulls out of a side road and hits you. It is unfortunate, but these things happen. Nevertheless, you are very shaken up. You both pull over and agree to swap insurance details. If your car is not moveable, you will need to arrange for it to be towed away. You do not have your insurance details on you, but you know the company you are insured with, so you google their phone number. You see your insurance company and its logo at the top of the results. You ring and you get through to someone who sounds very sympathetic, and they arrange to tow your car away.

Over the next few days, you are repeatedly in touch with them. They convince you that you need to hire a car, they sort out your repairs and they send you paperwork to sign for all those things. At no point do they tell you they are not your insurance company, but the reality is that they are not, and the fees that have been racked up for the tow truck, the repairs and the car hire are potentially excessive. They may also have invited you to see a doctor, maybe in a hotel or other obscure location, and convinced you that there is a valid claim for whiplash or other injury as well.

What is the problem with all this? Basically, behind the fake ad is an organisation that will claim for all these costs in a court case, based on the fact that it was not your fault. If they lose that court case, you are on the hook for the exorbitant costs. On top of that, you will have had an accident and failed to tell your insurance company, and there are potential legal ramifications of that as well.

I have been shocked to find out that there are qualified solicitors working for no win, no fee firms involved in this type of scam. These firms are fully registered with the Solicitors Regulation Authority. How can that possibly be ethical? It is clearly dishonest, and for that reason I would argue it is barely legal.

[Peter Swallow (Bracknell) (Lab)]

The hon. Lady is setting out an extraordinary situation. I want to draw her attention to another real challenge facing drivers: collisions with people who are not insured. Uninsured drivers cost the economy £1 billion a year, and they are disproportionately likely to be involved in collisions, speeding and hit-and-run incidents. That is why I introduced a ten-minute rule Bill last year to increase penalties, and I was delighted to see the Government take up that call for action in their road safety strategy. Is the hon. Lady aware of the massive issue of uninsured drivers, as well as the scams she is reporting on, and does she welcome further action on it?

[Helen Morgan]

I am aware, because I was once hit by an uninsured driver. It is incredibly stressful not knowing how to get the car fixed and whether it is going to be written off. I was very young and did not know how I was going to afford to deal with that problem. I welcome any measures to deal with uninsured drivers. At the heart of this issue is the fact that insurance fraud is not a victimless crime. The victim is put through an extremely stressful time, and everyone else pays through higher premiums. I thank the hon. Gentleman for raising that issue.

Let me return to my point about solicitors, who are supposedly bound by the ethical codes of their regulator. I am a chartered accountant. In every profession, there are individuals who let us down from time to time, but there are clearly described ethical standards to which members of our organisation should adhere. We must undertake annual training on spotting problematic ethical situations, which for an accountant may not always be clearcut.

I know that other professional bodies have a similar approach to this issue—yet a solicitor can work for a firm benefiting from this type of scam activity, and the firm might be fully registered with the Solicitors Regulation Authority. I argue that the SRA needs to up its game, because those individuals are bringing their profession into disrepute, seemingly with the blessing of the organisation that is supposed to uphold standards. Will the Minister have conversations with her colleagues across the Government to deal with this problem? Surely, people in this country should be able to trust a legal professional, and the Government should be taking steps to ensure that the profession has its house in order.

There is a related point: the websites and search engines that host these paid ads are clearly designed to defraud and mislead. When will we hold the tech companies to account for the content that they host? Surely, they should have a duty to do a basic level of due diligence on the ads they place at the top of their search results. The online world is a free-for-all, where some of the most powerful companies in the world absolutely disregard basic levels of morality so long as they are paid. What can be done to introduce some sort of regulation to crack down on fraud and prevent it from happening in the first place—essentially, when it is perpetuated online? The only people who are not paying anything are the owners of the companies that host the problem.

As I said in response to the hon. Member for Bracknell (Peter Swallow), fraud is not a victimless crime. In the case of motor insurance fraud, every driver is paying in the form of increased insurance premiums. When someone is the victim of a scam, they are left shaken, with their confidence knocked, and potentially significantly out of pocket too. My constituent is a retired professional. The realisation that they have fallen victim to a scam has had a profound effect on their self-esteem.

Paid ad spoofing is not the only type of motor insurance fraud. I thank the ABI, Aviva, Admiral and the Association of Personal Injury Lawyers for getting in touch in advance of this debate and providing briefings. Fraud remains the single greatest threat facing the UK, accounting for about 44% of all crime reported in England and Wales. It continues to pose a serious and systemic challenge to the insurance industry, and ultimately to honest motorists and consumers who are forced to pay the price.

In 2024 alone, £1.16 billion of fraudulent general insurance claims were identified, which was a further increase on the already staggering £1.14 billion detected the year before. Motor insurance remains the area most affected, with insurers uncovering more than 51,700 fraudulent motor claims worth £576 million. That is 5% higher than in 2023 and represents more than half of all detected insurance fraud.

The ABI has written to me to say that insurers are investing heavily to tackle the problem. Its members spend more than £200 million each year to combat fraud, including funding the Insurance Fraud Bureau, which leads the fight against organised insurance crime, and the insurance fraud enforcement department in the City of London police. Unsurprisingly, motor insurance fraud is the most prominent focus of investigation and enforcement activity. However, I argue that, in the case of paid ad spoofing, where there are properly registered firms clogging up the courts with excessive claims that could have been sorted out through the normal insurance settlement process, those organisations are operating in plain sight. I urge fraud specialists to investigate that.

Other types of fraud are equally serious. One of the most concerning trends is the rise of ghost broking, which is a crime where fraudsters sell fake or invalid car insurance policies to unsuspecting customers. Criminals obtain policies using false information to reduce premiums, then manipulate documentation to make those policies appear legitimate. The consequences for their victims are severe. Many believe that they are fully insured, only to find that they hold no valid cover under UK law. That often only comes to light when they are stopped by the police or attempt to make a claim following an accident. Drivers caught without valid insurance face vehicle seizure, potentially unlimited fines and even driving bans. Victims are then left to cover repair costs themselves and find new insurance, often at a much higher premium.

Although ghost broking was once carried out face to face, social media has transformed its reach. Fraudsters now routinely target people online, with younger drivers particularly at risk. That group are more likely to seek cheaper insurance options and engage with sellers via social media platforms. The scale of the problem is deeply concerning. Data published by Aviva in November 2025 shows that ghost broking cases have risen by 22% over the past two years. Almost one in three people surveyed reported buying car insurance through social media, and 84% of those who purchased a fake policy online suffered serious negative consequences, including police intervention and identity theft.

On average, those victims lose around £2,000, excluding the additional costs of fines, vehicle seizure, legal consequences and higher future premiums. That is a heavy burden to place on people who believed they were just doing the right thing. Again, the social media and online companies who host those adverts are the only ones not paying the price. I repeat my concern that this area is effectively unregulated.

As I have said, fraud is not a victimless crime. It drives up premiums for everyone and leaves individuals facing financial and legal consequences through no fault of their own. Tackling it effectively requires robust enforcement, proactive investigation and a willingness to change harmful practices wherever they occur, particularly when they are happening in full view of the system.

In the interests of time, and because many of them have been well rehearsed over the years, I have not touched on the other types of fraud for which we all must pay: fake claims, orchestrated crashes and even inflated claims, which large numbers of people admit to even though it is a criminal offence. I look forward to hearing from the Minister, particularly regarding the unethical practices of some in the legal profession and the steps that can be taken to prevent online giants helping to perpetuate this problem. I particularly look forward to her describing how we can look at this problem across Government, because I fear that it is falling between the stalls of the various Departments that have an interest in it.

--- Later in debate ---

[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.