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by Ken May

woman writing with gold penSounds scary right? But this can’t be real, right? They’re real, they’re dangerous, and they are looking for you!

Everybody wants cheaper auto insurance. We all get bombarded with ads from Geico, Progressive, State Farm, Allstate, and others offering low priced auto insurance. And with the number of drivers desperate for a better deal, this has lead to a whole new type of insurance fraud called underwriting fraud.

Premium or underwriting fraud occurs when somebody intentionally conceals (hides) or misrepresents (lies) information in the insurance buying process in order to get a better deal.

And this created the birth of the dangerous Ghost Brokers. Have you ever heard the term “it seems too good to be true”? The answer is you are right.

A Ghost Broker will alter key underwriting information in order to give the consumer (you!) a better rate.

Examples of this include:

·         Transposing your year of birth (say from 1986 to 1968)

·         Changing your marital status to married by creating a fictitious spouse to exclude from your policy.

·         Understating annual mileage (even though you drive to Orange County 5 times per week).

·         Altering your occupation (I didn’t know that he delivered pizzas!)

·         Undervaluing the replacement cost of your house to create a lower premium (one of the most dangerous acts I see a lot)

·         Hiding the fact that you own a dog with a history of biting (I had no idea that she has 3 pit bulls)


Ghost Brokers operate through web sites or small ads which target young drivers who face high premiums or unsuspecting seniors (a particularly heinous crime in my mind). They usually charge whatever broker fee they think they can get from the consumer without losing that consumer to somebody else. They often justify the low rate by stating that they can offer special discounts even though these so called discounts are illegal under proposition 103.

The unfortunate part of this scam is that the consumer will either be horribly under-insured or the policy purchased is worthless.

Years ago, I knew two agents in Oceanside who collected premiums for one month policies for a few months and then fled town in the middle of the night. They were once legally licensed insurance brokers with a nice store front location on Hill Street (now Highway 101). One of the agents was a regular attendee of a monthly agents meeting that I ran in San Diego.

How did I learn about this? A gentleman called me at my office stating that he couldn’t get a hold of his agent, knew that we also represented his insurance company, and asked what to do. I called the insurance company which stated that they hadn’t received a premium payment from this gentleman for the past 8 months! I drove over to the other agent’s insurance office and discovered that it had been cleaned out (it was like a ghost town which is fitting for a ghost agent).

As the president of the American Agents Alliance, I have tried for the past 3 plus years to encourage the California Department of Insurance to do even more to find and prosecute these Ghost Agents. They are hurting me and they are hurting you. Even if you have never personally been burned by one of these agents, you’re paying higher insurance premiums because of the damage that they have caused.

Insurance is a fiercely competitive business where many customers are shopping solely based on price. This is a mistake as consumers should be looking at value which is a fair price for a quality product with proper coverage.

Insurance companies have started implementing analytical technologies and conduct sophisticated data analysis in real time in an attempt to derail these fraudulent Ghost Agents but this is still a huge problem.

My advice is once you find an honest, ethical agent who is looking to bring you value with top rated insurance companies, stick with him or her. Don’t jump from agent to agent by falling for the heroin of obscenely low prices because you get what you pay for and sometimes you don’t get anything at all. “Who you going to call”?

Contact Ken May Insurance Services at 888-724-2086 for all of your Vista insurance needs today!

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