AAMI has paid $43,200 in penalties after ASIC found it had made false or misleading statements on its website and in radio advertisements for home insurance.
The Suncorp group brand’s promotion of its Home Building Insurance ‘Complete Replacement Cover’ stated that AAMI would repair or rebuild the insured house, no matter the cost to AAMI.
ASIC was concerned the statements were misleading because they did not disclose that, while AAMI could choose to arrange the repair or rebuild of the insured house, it could also choose to pay the policyholder the assessed cost of repairing or rebuilding the house, leaving the policyholder to arrange the repair or rebuild.
The insurer amended its advertising after ASIC raised its concerns. Acting ASIC Chair Peter Kell said it is imperative for insurers to be clear with potential customers about what the insurance covers and how claims will be paid: “Customers decide to take out a particular type of cover based on what is advertised.”
ASIC issued four infringement notices for representations that appeared on AAMI’s website during the period 7 November 2016 to 19 July 2017, and was broadcast in radio advertisements during the periods 7 November 2016 to 31 December 2016, and 16 January 2017 to 17 March 2017.
Following ASIC’s inquiries, AAMI will also revise its disclosure documents to better inform consumers about the claims process for Complete Replacement Cover, particularly when a cash settlement is provided. ASIC conducted this review after concerns were raised by Sarah Henderson MP, the Federal member for Corangamite, following the Wye River bushfires in 2015.
Kell said, “While we recognise that AAMI offers a type of home building policy that can help reduce the risk of underinsurance, advertising must not mislead consumers.”
As part of its review, ASIC also engaged with several consumers who had disputes with AAMI following the 2015 Wye River bushfires. AAMI has now settled all remaining claims for Wye River.