17 January 2018
In two separate media releases, ASIC has again demonstrated its focus on the inappropriate sale of ‘add-on’ insurance via car dealers. These actions have highlighted ASIC’s focus on insurers acting in the best interests of customers.
Insurers, Allianz and Suncorp will have to refund approximately 100,000 customers a combined total of $65.2m in premiums after it was found that certain types of ‘add-on’ insurance were of little or no use to the consumer. These actions are consistent with ASIC’s ongoing work in this area, following recent action also being taken against Suncorp, Swann Insurance, QBE and Virginia Surety.
ASIC has repeatedly raised concerns about ‘add-on’ insurance, given the number of cases it has identified in which insurers paid car dealership staff commissions to sell policies that had little or no benefit to customers.
The types of policies in question include cover for customers who are unable to pay their car loan because of sickness, tyre and rim insurances, and Guaranteed Asset Protection insurance (GAP), which covers a customer for losses if their car is written off and their car loan exceeds the insured value of the car.
ASIC identified a number of concerns, including that GAP insurance customers were unlikely to make claims because of how the cover was designed, and that many customers were over-insured.
The work of ASIC in this area will continue throughout 2018 to ensure that improvements are made to the sale and design of insurance products. ASIC is also consulting on the introduction of a deferred sales model to introduce a pause in the sales process. For further information on this, see http://asic.gov.au/about-asic/media-centre/find-a-media-release/2017-releases/17-280mr-asic-consults-on-reforms-to-add-on-insurance-sales-to-drive-better-outcomes-for-consumers/