ASIC revealed that both Allianz and Suncorp had sold insurance to car buyers that was of little to no value to them, following similar findings against QBE Insurance in mid-2017.
Allianz will refund a whopping $45.6 million to around 68,000 customers who purchased various add-on insurance premiums through car dealerships nationally between 1 December 2010 and 30 November 2017.
The affected Allianz products are:
- Loan Protection Insurance (LPI), designed to cover some loan repayments should the customer die or suffer serious illness or incapacity.
- Motor Equity Insurance (MEI), which covers the gap between the outstanding balance on the car loan and the insured value if the car is written off.
- Tyre and Rim Insurance (TRI) that covers the cost of wheel damage resulting from a blowout.
- Warranty Insurance to cover certain repairs once a manufacturer’s warranty expires.
ASIC expressed a variety of concerns about these policies, including that rebates were not made if the car loan was paid off early, that the size of the deposit on the vehicle was not taken into consideration and that customers would be ineligible to lodge a claim under the policy conditions.
Partial refunds will be offered to customers who were over-insured or paid off the loan early, while full refunds will be paid where the policies offer customers little or no value.
Meanwhile Suncorp is set to reimburse 41,428 customers a total of $17.2 million for similar Guaranteed Asset Protection (GAP) insurance policies sold by its subsidiary MTA Insurance between 2009 and 2017.
It is unclear how many of the affected customers from either insurer are SMEs compared with private individuals.
“The refunds offered by Allianz [and Suncorp], together with those from other insurers, make up one of the largest compensation programs achieved by ASIC, with over $120 million in refunds to consumers as a result of ASIC shining a spotlight on these poor consumer outcomes,” said acting ASIC chair Peter Kell.
“Our message to insurers is simple: the needs of your customers must come first in the design, price and sale of your products.”