Buying insurance through Instagram messages and WhatsApp chats has become the new norm for many younger drivers in the UK and we’re living in a time where social media is now being used for a lot more than just shopping for your everyday products.
The Financial Conduct Authority shared a press release which found that 49% of drivers aged 17 to 25 had bought insurance through social media or messaging apps. The FCA survey, conducted by Kantar also found that 45% of these youngsters generally trust products or services bought through social media.
Why Are Youngsters Using Social Media For Insurance Deals?
Money is one reason many younger motorists are looking online for cheaper deals. The FCA found that 15% of young drivers find it difficult to squeeze insurance into their monthly budget. Research from CRIF also found that 43% of Gen Z drivers feel insurance costs, petrol prices and diesel prices from the US-Middle East conflict are making driving unaffordable.
Sara Costantini, Regional Director for the UK and Ireland at CRIF, said, “The FCA’s findings about the number of young drivers buying fake insurance via social media is concerning – and may be resulting in many motorists unknowingly driving without cover.”
She also said, “Rising premiums in recent years are likely to have pushed younger drivers towards social media, purchasing what may look like good policies that come at cheaper costs. This is echoed in our own research, which finds that 43% of Gen Z feel the cost of insurance, combined with the recent increases in petrol and diesel costs due to the Middle East conflict, is making driving unaffordable.”
CRIF found that 36% of younger drivers believe insurers must do more to make policies affordable and consistent and 26% said motor insurance still feels expensive even after premiums went down.
What Are Ghost Brokers And How Do The Scams Work?
The FCA says ghost brokers are criminals pretending to be real insurance brokers. They sell fake or invalid insurance policies, usually targeting younger drivers looking for cheaper deals online.
These scams usually begin on social media platforms such as Instagram or Facebook Marketplace. These scammers often move conversations onto WhatsApp or Facebook Messenger after first contact. The FCA says scammers regularly use fake documents that look very similar to genuine insurance paperwork.
Some ghost brokers even sell policies that do not exist at all. Others buy real insurance policies using false information to lower the price before selling them on to drivers. In certain cases, the policy is cancelled shortly after payment without the driver realising.
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The FCA made a warning that victims may only discover the scam after police stop them or after trying to make a claim following an accident. Driving without valid insurance is a criminal offence in the UK and can lead to fines of up to £300, penalty points, driving bans and vehicles being seized or crushed.
The regulator also said that scammers sometimes ask buyers to pay through bank transfer, cryptocurrency or cash instead of secure payment systems. Scammers often avoid professional email addresses, office locations and UK landline numbers.
Ghost broking complaints are also becoming more of a thing. The Insurance Fraud Bureau reported a 52% increase in ghost broking activity between 2022 and 2024 – Aviva slightly lower at 22%, in cases since 2023.
What Are Regulators Telling Drivers To Do?
The FCA is now working with social media influencers to try bring awareness and to minimise younger drivers falling for all these fake insurance scams. The regulator wants young motorists to check insurance sellers carefully before handing over money.
Graeme Reynolds, director of insurance at the FCA, said, “Tight budgets make cheap offers tempting – and scammers take advantage of that. Don’t get ghosted by a policy that doesn’t exist. Check the FCA Firm Checker before you buy, because driving uninsured could cost you far more than any premium.”
The FCA says drivers should avoid deals sold only through social media or messaging apps. Genuine insurance sellers should have a real website, office address and contact number. The regulator also wants drivers to use the FCA Firm Checker and make sure the contact details match the authorised business.
Drivers are also being advised to check the Motor Insurance Database after buying cover to confirm their vehicle is insured correctly. The FCA says authorised insurance businesses give customers access to the Financial Ombudsman Service and the Financial Services Compensation Scheme if anything goes wrong.
Costantini believes insurers also need to have a think about pricing for younger motorists. She said, “As a result, over a third (36%) of this younger generation believe that insurers must do more to make their policies affordable and consistent, and a quarter (26%) say that despite premiums falling, motor insurance still feels expensive.
“Solving the issue of fake insurance policies will take a collaborative industry approach, and insurers can do their bit by utilising the latest innovations in consumer profiling, open banking data and analytics to better understand customers. The result offers improved risk management, personalised pricing and more competitive policies, benefitting providers and consumers alike.”
