Insurers check every claim for fraud, not the ad that sold it
Insurers have built fraud checks into underwriting and claims but not into the adverts that sell fake policies on social media. Nearly half of young drivers buy cover this way, FCA research shows.
A seventeen year old scrolling late at night finds a car insurance quote inside a sponsored post, cheaper than anything a comparison site will show, and buys it before the ad disappears from their feed.
Nearly half of young drivers, 49 per cent, have bought motor insurance through social media or a messaging app. Thirty nine per cent say they would not know how to spot a fake policy if they held one. FCA press release Those figures come from the regulator’s own research, commissioned from Kantar, not from a trade body with an angle to work.
On the enforcement side, Aviva’s cease and desist notices against ghost brokers have doubled compared with last year. Its requests to take down fraudulent websites are up more than eightfold over the same period. Aviva newsroom statement
Here is my problem. Insurers have spent a decade building fraud checks into underwriting and into the claim itself, scoring applications, verifying images, tracing links between claims that look too similar. None of that checks the advertisement that sold the policy in the first place.
A takedown notice answers harm that has already happened. By then the driver has paid and already believes they are covered.
An industry that checks every claim for fraud has not yet checked the advert that sold the policy.
A nightclub can turn someone away at the door for a fake identity card. It can still have handed out flyers down the street promising an event that was never going to happen. Checking the door protects the door, not the person who turned up because of the flyer.
Ofcom’s consultation on a fraudulent advertising code of practice closed this month. Insurers including Aviva used it to call for mandatory verification of financial advertisers and faster takedowns.
That is the industry asking someone else to police the part of the chain it genuinely cannot reach, which is fair, since no insurer can moderate a social platform. But the part the industry does control, which paid placements its own affiliates and brand partners run and on which platforms, has had far less scrutiny than the policy wording those adverts eventually lead to.
A young driver who buys a fake policy through a sponsored post is not a fraud statistic on the day they buy it. They become one only when they need to claim, and discover there was never a policy to claim against.
Fraud and financial crime directors already audit claims handlers for conflicts of interest and underwriters for pricing bias. The same audit, turned on a firm’s own paid social and affiliate channels, would ask a plain question: would this advert have been approved if someone had checked it before it ran, rather than after a regulator or a journalist did.
The cost of getting this wrong rarely lands on the firm first. A driver sold a fake policy through that sponsored post is still, in law, driving without insurance, whatever they believed they had bought. They can be fined and lose their licence over a decision made easier by an advert the industry’s own channels may have helped put in front of them.
That is the test worth setting now. Not whether takedown numbers are rising, because they are, but whether anyone inside the industry checked the advertising before the harm reached a customer.