Two major insurance companies will refund a combined total of $62.8 million to customers after ASIC found they sold insurance that “provided little or no value”.
Both Allianz and Suncorp (through its subsidiary MTA Insurance) will refund $45.6 million and $17.2 million respectively after ASIC found insurance sold through car dealerships provided no value to customers.
The refunds apply to four add-on insurance products sold by Allianz – motor equity insurance, loan protection insurance, tyre and rim insurance, and warranty insurance.
ASIC said it was concerned with the sale of these products for numerous reasons, including that “customers were over-insured because they were sold a higher and more expensive level of cover than needed” and would sometimes be ineligible to make a claim on the policy they were sold.
According to the regulator, Allianz will repay premiums on policies that are of “little to no value”, offer partial refunds to customers sold more insurance than was needed and to customers who purchased motor equity insurance but who also held Allianz comprehensive car insurance.
Refunds paid by MTA Insurance apply to MTA guaranteed asset protection insurance and MTA consumer credit insurance.
ASIC said guaranteed asset protection clients would be unlikely to make a claim on their policy, and the coverage duplicated existing coverage under the company’s comprehensive car insurance.
Additionally, ASIC said the life cover sold to young people through the consumer credit insurance was often not needed.
Suncorp will provide refunds to guaranteed asset protection clients whose policies were in effect at 1 September 2017, and will offer to refund life and trauma premiums to consumer credit insurance customers who were 25 years old or younger when the policy was sold to them.
Suncorp will also pay a $50,000 community benefit, ASIC said.
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