News eDaily04 Aug 2017

Australia:QBE refunds over US$12 mln over add-on insurance

04 Aug 2017

QBE Insurance (Australia) will refund more than 35,000 add-on insurance customers up to A$15.9 million (US$12.6 million) they paid for insurance bought through car dealerships where the insurance provided little or no benefit, following findings by the Australian Securities & Investments Commission (ASIC).

The corporate regulator said that it working with other insurers to achieve similar outcomes where similar conduct occurred.

In QBE's case, the insurance products were QBE Guaranteed Asset Protection (GAP) and Consumer Credit Insurance (CCI) sold through car dealerships across Australia between 2011 and 2017, said ASIC.

ASIC found that the QBE GAP insurance:

  • was sold where there was unlikely to be a gap between the insured value of the car and the loan balance, for example because the customer paid a large deposit;
  • duplicated existing cover held by consumers;
  • provided consumers with more insurance than they needed.

ASIC found that QBE CCI insurance was sold to young people who had no dependents and who were unlikely to need the cover.

In response to ASIC's concerns, QBE will:

  • proactively refund the premium paid by customers who were unlikely to need GAP insurance, especially where they paid a large deposit;
  • proactively refund all GAP insurance customers at least one year's premium because 'new for old' cover under their comprehensive motor insurance would have provided similar cover. Consumers can claim a larger refund if their comprehensive cover provided more than one year of 'new for old' vehicle replacement;
  • partially refund customers who were sold more GAP cover than they needed;
  • proactively refund customers under 25 years the cost of the life or trauma insurance element of their CCI premium;
  • for customers who paid their loan off early and held both GAP and CCI insurance, partially refund the GAP insurance premium from the date the loan was paid off;
  • make a $50,000 payment to Financial Literacy Australia.

Together, these refunds, with interest, will amount to approximately A$15.9 million.

“This large-scale remediation by QBE is a direct result of our 2016 add-on insurance review, which uncovered the widespread sale of insurance with little or no value to consumers,” ASIC Deputy Chair Peter Kell said.

“We put all add-on insurers on notice following our review, and we welcome efforts made by QBE to address poor consumer outcomes.”

In 2016, ASIC released three reports covering its review of the sale of add-on insurance through car dealers, which found that the insurance is expensive, of poor value and provides consumers very little or no benefit. ASIC is working with insurers to see that improvements are made in the sale and design of add-on insurance products.


 


 


 

| 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