News eDaily17 Apr 2017

Australia:Car colour & marital status can decide motor premiums

17 Apr 2017

Married Australians who purchased a white car early in the morning could be paying lower insurance premiums than others, a Senate inquiry into general insurance practices has heard.

Although the difference in premium costs was initially established because white paint costs less than coloured paint, insurance companies told the inquiry that owners of white cars generally make fewer claims, reported The Daily Telegraph.

The inquiry, held last week, also heard that customers who appear before noon could also determine premium discounts.

Last November, the Senate’s economic reference committee started an inquiry into the general insurance industry, which among other things will determine whether an independent comparison service is to be set up.The inquiry is examining transparency and competition in the home, strata and car insurance industries.

Insurers were also pressed in the inquiry about a practice referred to as 'red-lining,' which excludes homes in those 'red' suburbs or streets from coverage.

Legal framework

The inquiry also heard about insurance companies exploiting an exemption to unfair contract rules and hiding behind complex product disclosure statements, reported The Sydney Morning Herald.

The Consumer Action Law Centre (CALC) told the inquiry that there is currently no legal framework effectively regulating general insurance products.

"Insurance policies are riddled with terms which, on their face, could be unlawful if unfair contract terms laws applied to insurance," Mr Gerard Brody, Chief Executive of CALC, said.

He said one example of insurers potentially acting unfairly was cash settlement clauses in home building policies.

"These allow many insurers to settle a home building claim with a one-off cash payment. This means that if someone loses their home in a flood or fire, an insurer can get a quote on the rebuild, with all their bulk trade discounts, and just pay out that amount. It can bear little resemblance to the real cost of someone rebuilding their own home.”

Mr Brody said there was a need for greater transparency in the industry and an improved standard cover regime, which would allow consumers to better compare policies.

Representatives from the Australian Securities and Investments Commission who appeared before the inquiry, called for standardised insurance definitions to make it easier for people to compare policies.


 

| Print | Share

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.

 

Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.

Other News


Follow Asia Insurance Review