ASIC has revealed that Allianz Australia Insurance Limited will refund more than $8 million in consumer credit insurance (CCI) premiums and fees including interest to more than 15,000 consumers.
ASIC Commissioner Sean Hughes said, “Disappointingly, our work on the sale of CCI has highlighted widespread mis-selling and poor product design. This remediation outcome is only one of many examples where CCI has failed consumers. We expect insurers to cease to sell insurance products that provide little or no value.”
“We need a financial system that is fair. Insurers and other financial institutions need to rise to the challenge and embed the principle of fairness into their businesses to ensure we do not see any further instances of this kind of poor value product being pushed on to consumers,” added Hughes.
Allianz’s refund relates to the sale of cover to consumers who were ineligible to make a claim for unemployment or disability, the sale of death cover to customers under 21 years of age who were unlikely to need that cover, and the charging of fees to customers who paid premiums by the month without adequate disclosure. Allianz will stop issuing new CCI policies from 30 September 2019. It will continue to fulfill its obligations to existing CCI policyholders. In 2018, Allianz refunded $45.6 million to 68,000 consumers for add-on insurance sold through car dealerships that were of little or no value.
The remediation program covers certain CCI products issued by Allianz including mortgage and loan protection policies sold through financial institutions. These CCI products provided cover against the risk of consumers being unable to meet loan commitments because of death, injury, illness or involuntary unemployment. Allianz is expected to write to all affected consumers about their refund offer from October 2019.
ASIC is currently consulting on a proposal to ban the sale of CCI and direct life insurance through unsolicited telephone calls and has also commenced investigations into a number of entities that have been involved in mis-selling CCI to consumers.