Flashback to early 2019 – Misselling of life insurance products made headlines all across the UAE. Many UAE residents had been burnt, after buying supposedly attractive long-term investment-cum-insurance plans. But this is not the only scam that exists in the insurance industry. There are many others that just do not make it to the headlines.

Our team pulled the lid off car insurance scams and put it in its mission to educate UAE residents about what can go wrong and what residents should “NOT” do when purchasing their insurance policy. The good news is that there is a checklist to go through to ensure you are not being scammed.

Enter ‘Ghost Broking’ – A notorious type of car insurance fraud that’s been making the rounds all over the world, and has now reared its ugly head in the UAE. Ghost brokers pretend to be genuine insurance agents acting as middlemen between insurance providers, brokers and drivers. They scam car owners by providing the “cheapest deal”, the quickest policy or “cash facility” convenience.

How can it all go wrong?

The “Cheapest deal” on the market

Insurance providers do not go on SALE. There is always a catch if someone offers you a policy that is cheaper than the price on the policy. The typical scam is they take cash from the consumer but never pay it to the insurance provider/broker. Without any payment proof provided to the broker/insurance company, your policy may be downgraded to Third-Party only. 

What to check for: Always ask for an official receipt from the insurance provider or the broker even if it is through the dealership.

Tampering with car value

There is also the case of changing your car value without your knowledge (we have even seen the value of the car being tampered with on the policy) and therefore offering you a lower price. The surprise comes when it comes to a total loss and your claim pays you a lower amount than what you thought the car value was. 

What to check for: Always request the policy to be sent to you directly to your email by the broker/aggregator or insurance company.

The convenience of paying cash

Just recently Fatima (name changed for anonymity), who approached Souqalmal to buy her car insurance, shared how an insurance scammer duped her last year. As Fatima began her search for a car insurance policy a few months back, a colleague referred her to an independent insurance agent. The agent paid her a visit, took down her personal information and car details and got back with a quote the next day. In order to ‘keep things simple’, he requested that the payment of nearly AED 3,000 be made in cash to him. It took the agent one more day to send her a copy of the new car insurance policy, and that was the end of it, or so she thought.

About a month later, Fatima received a call from the insurance provider stating that the agent had failed to pay them for the policy he had issued in her name. Fatima realized the blunder she had made by trusting a complete stranger with her car insurance and paying him cash up front, with no official proof of payment. In these cases, the comprehensive policy may be downgraded to Third Party only if there is no proof of payment from a regulated insurance broker or insurance company.

The unfortunate truth is that Fatima’s story resonates with many others who’ve lost thousands of their hard-earned dirhams to insurance fraud.

DIY: Do it yourself

The best solution is to not allow any individual to represent you unless they are a regulated broker/aggregator or insurance company.

  • The price on the policy may be tampered with by the person selling you the policy, by adding a mark-up on it. This is not legal and should be reported if you come across anyone doing so. 

Be Aware: Always ask for the policy document to be sent to you directly from the broker/insurance provider and insist that the price and car value is mentioned.

  • Paying cash to an independent insurance representative who never pays that amount to the provider. And as long as your policy has not been paid for you cannot make a claim. 

Be Aware: Avoid cash payment and always ask for an official receipt from a regulated company.

  • Your policy gets cancelled by your agent without your knowledge and he cashes the refund while you are driving an uninsured car. 

Be Aware: DIY – do your own research and represent yourself when purchasing a policy.

Your checklist

1. Is this person or agency I’m dealing with a regulated entity allowed to sell insurance?

2. Is the policy/quote being sent to me directly to my email from the regulated entity?

3. Is the price on the policy the price I paid for? If cheaper, often brokers/aggregators or insurance providers would give you a discount, which comes out of their commission. Anything more than 5-6% of the price should be questioned.

4. If I am paying by cash, am I giving it to the entity issuing the policy or to an independent person? It is best to request a payment link online to the aggregator site or insurance provider site and pay with your credit card.

5. If you are buying your car through a dealership, always ask for the policy document to be sent directly to you including the price on it, and the official receipt not from the dealer but from the company issuing the policy. (Only a broker/aggregator or an insurance company can do so.)

This article was originally published in Arabian Business on behalf of Souqalmal.com.