The Australian Securities and Investments Commission (ASIC) has made the decision to sue aggregator InsurTech Choosi for allegedly misleading prospective customers through its funeral and life insurance comparison services.
In proceedings filed in the Federal Court, the regulator alleges Choosi made false or misleading representations to customers by claiming it compared products from a range of funeral and life insurers. In doing so, ASIC alleges Choosi contravened ss 12DB and 12DF of the Australian Securities and Investments Commission Act 2001.
ASIC claims that Choosi, from at least 1 July 2019 and ongoing, only compared policies issued by a single insurer with one limited exception. All policies were distributed by Greenstone Financial Services, a company associated with Choosi.
The regulator further alleges that at least 4,225 funeral insurance policies and 9,478 life insurance policies were sold during this period, with Choosi receiving A$61m ($39.4m) in commissions.
ASIC deputy chair Sarah Court said they were taking action to stop companies taking advantage of consumers trying to shop around for the best deals.
“We allege Choosi misled thousands of consumers into thinking they were comparing options from a range of insurers. We will contend people were led to believe they were making a sensible decision by comparing policies; however, they were denied genuine choice,” said Ms Court.
“Consumers may have been encouraged to buy a funeral or life insurance policy when a cheaper or more suitable policy might have been available from other insurers that were not assessed. Comparison websites must provide a meaningful comparison service and not simply operate as a sales channel or distribution platform for companies.”
Ms Court also said that while comparison sites can sometimes be useful for consumers, they should only be part of how people shop around for financial products.
ASIC alleges Choosi made the misleading representations on its website, across social media and via television commercials and advertorials.