Introduction
Ghost broking is a form of insurance fraud in which individuals or networks pose as legitimate brokers and sell insurance policies that are either fake, manipulated, or unauthorised. The customer believes they are buying genuine cover; in reality, they are exposed to significant legal and financial risk.
Although ghost broking has been more widely publicised in overseas markets, the dynamics that enable it — rising premiums, social media reach, and demand for cheaper cover — are universal. Australian insurers and regulators have flagged it as an emerging risk area requiring active controls at policy inception.
What Ghost Broking Means (Plain English)
Ghost broking occurs when someone pretends to be an authorised broker and sells what appears to be an insurance policy. The customer pays the ghost broker; the cover they receive is either non-existent, obtained fraudulently, or quickly cancelled after issue.
Common variations include:
- Selling entirely fake policy documents that have no underlying insurer
- Taking out genuine policies using false information to reduce the premium, then passing the policy to the customer
- Buying legitimate policies and cancelling them shortly after, keeping the difference between the premium paid by the customer and the partial refund obtained
The Australian Regulatory Context
In Australia, insurance broking is regulated by the Australian Securities and Investments Commission (ASIC). Insurance brokers must hold an Australian Financial Services (AFS) licence or operate as an authorised representative of a licensee. Selling insurance without authorisation is a breach of the Corporations Act 2001 and carries significant penalties.¹,²
Consumers can verify whether a broker is authorised via ASIC’s Financial Services Register. Where ghost broking activity is identified, ASIC has powers to take enforcement action against unauthorised parties, and the conduct may also be prosecutable as fraud under state and Commonwealth criminal law.¹
How Customers Are Targeted
Ghost brokers typically operate through social media platforms, messaging apps, and word-of-mouth networks. International experience — particularly from the United Kingdom, where the Insurance Fraud Bureau has reported a 52% rise in ghost broking activity between 2022 and 2024 — shows that younger drivers, newer drivers, and communities where English is a second language are common targets, with motor cover offered at prices substantially below the market rate.⁴,⁵
Marketing material can look professional and may reference well-known insurer brands without authorisation. Payment is often requested via bank transfer or cash, with documents supplied by email or messaging app.
Why Ghost Broking Is Damaging
The harm caused by ghost broking is significant and falls across multiple groups:
- Customers may be driving uninsured without realising, exposing them to fines, prosecution, and personal liability in the event of a collision
- Insurers absorb the cost of fraudulent policy inceptions, including claims paid before the fraud is identified
- Honest policyholders bear the indirect cost through higher premiums across the market
In Australia, driving without valid CTP cover is an offence in every state and territory, with penalties varying by jurisdiction.
Detection Signals to Consider
Ghost broking activity typically leaves identifiable signals at the policy inception stage, including:
- Multiple policies sharing a single email address, phone number, or payment method
- Rapid cancellation patterns following policy inception
- Discrepancies between the named policyholder and the actual user of the policy
- Use of identical documentation across otherwise unrelated applications
Role of Policy-Level Detection
Detecting ghost broking effectively requires fraud capability at the point of policy inception, not only at claim. By analysing application data, identity information, and supplier relationships at the time of policy creation, insurers can intervene before fraudulent cover is issued.
As the Australian insurance industry develops a stronger industry-wide fraud detection capability under the ICA’s planned initiative, the ability to identify ghost broking patterns across multiple insurers is expected to improve.³
Related Topics
- Application fraud
- Fronting in motor insurance
- PEP screening
- Perpetual KYC
Sources & further reading
¹ ASIC Financial Services Register — moneysmart.gov.au
² Corporations Act 2001 (Cth) — AFS licensing framework
³ Insurance Council of Australia — industry fraud awareness materials
⁴ Insurance Fraud Bureau (UK) — 2025 ghost broking data, for international context
⁵ City of London Police — Insurance Fraud Enforcement Department reporting
