Major insurer QBE Insurance is set to reimburse more than 35,000 customers for add-on policies on car insurance that is deemed to have been improperly sold, and other insurers may follow suit.
In a statement from ASIC, it was revealed that thousands of consumers and business owners who purchased vehicles through car dealerships were sold add-on insurance that provided them will little or no benefit.
The insurance products, known as QBE Guaranteed Asset Protection (GAP) and Consumer Credit Insurance (CCI), were sold through car dealerships nationally between 2011 and 2017.
An investigation by ASIC revealed that the GAP insurance was sold where there was unlikely to be any gap between the loan balance and the car’s insured value, often duplicated existing cover held by the car owner and provided excess insurance coverage.
Additionally, the CCI insurance was found to have been sold to young people without dependants who were unlikely to have any need for this type of coverage.
Affected policy holders will be refunded the amounts paid on unnecessary coverage, and will also make a $50,000 payment to Financial Literacy Australia.
“This large-scale remediation by QBE is a direct result of our 2016 add-on insurance review, which uncovered the widespread sale of insurance with little or no value to consumers,” said ASIC deputy chair Peter Kell.
Mr Kell called on other providers of this type of insurance cover to review their sales procedures and similarly refund consumers found to have been sold inappropriate policies.
“Insurance must meet the needs of the consumer first and foremost. All add-on insurers should review the sale of policies and refund consumers who were sold policies they didn't need.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.