In recent years, a troubling trend has emerged in Canada’s insurance industry: ghost insurance brokers — unlicensed individuals selling fake or fraudulent insurance policies — are preying on unsuspecting consumers.
Ghost brokers operate by creating counterfeit insurance policies, tampering with legitimate ones or selling falsified documents. They target vulnerable individuals, especially new drivers, high-risk motorists and others unfamiliar with Canadian insurance processes, such as newcomers to the country. These insurance scams often leave victims financially exposed and driving without valid coverage.
Ghost brokering is a growing problem across the country, says Debora Hendrickson, Managing Director of Client Experience and Operations, Personal Risk and Small Business Insurance at NFP.
“While it’s been happening for a long time, it used to be rare. Now, with rising insurance rates and people looking to cut costs and scammers having easy access to a pool of victims through social media, these scams have become far more common.”
How Ghost Brokers Operate
Ghost brokers often advertise on social media or other online platforms, offering deals that seem too good to be true. These ads typically include phone numbers or websites to make their operation appear legitimate. Victims may be lured into paying upfront — often in cash or via e-transfer — only to receive fake insurance documents or policies riddled with misrepresentations.
In some cases, ghost brokers impersonate legitimate insurance agents, using fake business names or websites to gain their victims’ trust. They may also manipulate details on genuine policies to secure cheaper rates, leaving the insured without the proper coverage.
Hendrickson points out that first-time insurance buyers are particularly vulnerable. “These individuals may not fully understand the coverage they need or the process to get it, which makes them easier targets,” she says.
The High Cost of Insurance Scams
The consequences for victims of ghost brokering can be severe. Without valid insurance, motorists face steep fines, license suspensions and potential lawsuits in the event of an accident. Victims also lose the money they paid for the fake policy and must purchase a legitimate one, adding to their financial burden.
In some cases, victims may even face criminal charges if authorities suspect they knowingly participated in fraud. Often the scam only comes to light when a claim is denied, police stop the driver or the insurer contacts them about inconsistencies in their policy.
Protect Yourself Against Ghost Insurance Brokers
To avoid falling victim to ghost brokers, Hendrickson emphasizes the importance of verifying an insurance broker’s credentials. “Check with your provincial regulatory body to ensure the broker is licensed,” she advises. For example, in Ontario, consumers can verify licenses through the Registered Insurance Brokers of Ontario.
Other tips to protect yourself include:
- Beware of offers that seem too good to be true. Extremely low insurance premium rates are often a red flag.
- Request official policy documents. Legitimate brokers provide these directly from the insurer.
- Avoid cash-only transactions. Reputable brokers accept various payment methods and issue receipts.
- Use trusted channels. Purchase insurance through well-known brokerages or insurers endorsed by industry associations.
If you suspect you’ve been scammed, report the incident to your insurer, your provincial regulatory body or the Insurance Bureau of Canada. Many larger insurers also have dedicated fraud detection teams to investigate suspicious activities.
Insurance Industry and Regulatory Efforts
Regulatory bodies and industry groups, such as the Insurance Bureau of Canada, are working to combat ghost brokering through increased awareness campaigns and stricter penalties for fraud. In Alberta, for example, the Superintendent of Insurance recently issued an advisory warning consumers about the risks of purchasing auto insurance from unlicensed brokers.
Hendrickson stresses the industry’s role in educating consumers. “Our job is to provide clear information about insurance and support customers when they need us most,” she says.
Ultimately, staying informed and vigilant is the best defense against ghost brokers. By taking the time to verify credentials and understand your insurance options, you can ensure you’re protected.
Don't fall victim to ghost insurance brokers. Protect yourself and your assets by verifying credentials and understanding your insurance options. Contact our licensed experts at NFP today for a reliable insurance quote and ensure peace of mind for your home, car, boat, motorcycle, pet, and more.