Allianz Australia Insurance Limited (Allianz) will refund over $8 million in consumer credit insurance (CCI) premiums and fees including interest to more than 15,000 consumers.
This follows ob体育鈥檚 review of the sale of CCI by lenders in Report 622 Consumer credit insurance: Poor value products and harmful sales practices (REP 622), and forms part of ob体育鈥檚 broader priority to address harms and unfair practices impacting consumers in insurance.
Allianz鈥檚 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.
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.
To address these issues, Allianz will,
- for ineligible sales of unemployment and disability聽cover,
- refund premiums charged plus interest for active, 聽聽聽聽聽 cancelled or lapsed policies sold between 1 January 2011 to 31 December聽2018;
- reassess all withdrawn and declined claims where the 聽聽聽聽聽 consumer was ineligible for the policy at the time of sale;
- invite consumers to submit a claim if they have not 聽聽聽聽聽 already done so and pay valid claims plus interest; and
- continue to honour active policies and not rely on 聽聽聽聽聽 employment eligibility criteria as a basis to decline an unemployment or聽disability claim;
- for sales of death cover to customers under 21 years of聽age,
- refund all premiums charged plus interest for active, 聽聽聽聽聽 cancelled or lapsed policies sold between 1 January 2011 to 31 December聽2018; and
- preserve existing death cover for active policyholders聽on current terms without charging for it;
- for monthly policy payment customers,
- refund all administration fees and loading charged聽plus interest; and
- correct any future direct debit amounts.
ob体育 Commissioner Sean Hughes said, 鈥楧isappointingly, 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.聽 We expect insurers to cease to sell insurance products that provide little or no value.鈥�
鈥榃e 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鈥� added Mr Hughes.
Allianz will stop issuing new CCI policies from 30 September 2019. It will continue to fulfil its obligations to existing CCI policyholders.聽
Allianz is expected to write to all affected consumers about their refund offer from October 2019. Consumers with questions about their cover should contact Allianz by email at [email protected].
Background
ob体育鈥檚 recent review of the sale of CCI has resulted in refunds of over $100 million due to more than 300,000 affected consumers. On 11 July 2019, we released Report 622 Consumer credit insurance: Poor value products and harmful sales practices (REP 622) detailing our findings and setting minimum standards for lenders and insurers who issue or sell CCI (19-180MR).
ob体育 is currently consulting on a proposal to ban the sale of CCI and direct life insurance through unsolicited telephone calls (19-188MR). The proposed ban aims to address unfair sales conduct and protect consumers from being sold products that they do not need, want or understand.
ob体育 has also commenced investigations into a number of entities that have been involved in mis-selling CCI to consumers.
Separately, 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 (18-008MR).
has information to help consumers understand what to consider before taking out .
Editor's note:
Allianz will remediate the value of any premiums paid for death cover for all active, cancelled or lapsed Loan Cover Insurance policies sold during the remediation period where the customer was less than 21 years of age at the time of sale.