Reports of 'ghost brokers' in Alberta prompt warnings from regulator, insurance company

Alberta's insurance regulator is warning consumers to be wary of unlicensed insurance agents when buying car insurance. 

In a recent consumer alert notice, Chris Merriman, Alberta's superintendent of insurance, said he has seen an increase in reports of "unscrupulous individuals purporting to offer automobile insurance."

Two types of schemes

The notice said fraudulent, unlicensed agents, commonly known as "ghost brokers," claim to help car owners find cheaper insurance for a fee, often online through social media or over the phone. 

The agents either pretend to be their customers and provide falsified details to insurance companies or they give people forged policies and pink cards. 

The notice said ghost brokers often target newcomers to Canada and people who don't understand the province's car insurance system.

"Often victims only realize they do not have legitimate insurance after a loss occurs, leaving them uninsured, potentially destitute and legally vulnerable," Merriman said in the notice.

The superintendent, who regulates the insurance business in Alberta, isn't the only person raising the alarm about fraudulent agents.

In a Sept. 11 news release, home and auto insurance company Aviva Canada warned Canadians of a ghost broker known as AllcoveredbyAviva or Allcoveredbrokers operating in Alberta.

Jamie Lee, the head of financial crime and fraud at the company, said in the release that Canadians were being asked to transfer money for insurance premiums and were led to believe they had bought auto insurance coverage with Aviva. Some of them received fake pink slips, she said. 

The news release said the ghost broker advertised on social media sites and claimed to be affiliated with Aviva. 

Karim Mouait, president of Cornerstone Insurance Brokers and president-elect of the Insurance Brokers Association of Alberta, said he became aware of the issue through word of mouth last month, hearing stories of people receiving falsified pink cards.

He said inflation has put a tremendous amount of financial pressure on households, so people are looking for ways to save money on car insurance.

"It becomes an opportune time for fraudsters to take advantage of people," he said. 

Andy Dykstra, associate vice president of enterprise fraud at Co-operators, a financial services co-operative, said the problem has increased lately and isn't just happening in Alberta. 

"It's hard to keep up with what they're they're doing and they're very good at being innovative and just looking for the next vulnerability, wherever it may be," he said. 

He said insurance companies have ways of detecting and preventing it, but they are not bulletproof.

Red flags for consumers

The superintendent's notice said consumers can protect themselves by looking up licensed agents and insurance companies.

Mouait and Dykstra both said upfront fees, requests to send cash payments and very low rates should all be red flags for consumers. 

"If you're shopping around and the deal is too good to be true, be worried about that," Dykstra said.