Insurers Suncorp and Allianz will be forced to repay almost $63 million to thousands of customers who were sold worthless or near-worthless insurance add-ons when buying cars at dealerships.
Acting Australian Securities and Investments Commission chair Peter Kell said the insurers agreed to refund $62.8 million in premiums after selling expensive add-on insurance that offered little or no value to car buyers.
ASIC said that between between 2010 and 2017, Allianz sold problematic policies such as Motor Equity Insurance, which covered any shortfall between the insured value of a car and the amount owing on a car loan.
In some cases, ASIC said, “it was unlikely customers would be able to claim on their MEI policy because the insured value of the car was more than the car loan (for example, because the customer paid a large deposit)”.
A similar product was offered by Suncorp’s MTA Insurance.
On other occasions the watchdog said customers of both companies were sold policies they would be unlikely or eligible to make a claim on, such as young people offered inappropriate life insurance, or were sold a more expensive level of cover than they needed.
Suncorp will make $17.2 million in refunds to 41,428 MTA Insurance customers while Allianz will refund 68,000 customers to the tune of $45.6 million.
ASIC has undertaken a two-year pursuit of questionable add-on insurance policies sold through car dealers.
The latest concessions add to a string of payouts for add-on insurance, with Swann Insurance refunding $39 million in add-on insurance premiums and QBE refunding $15.9 million last year.
“The refunds offered by Allianz, together with those from other insurers, make up one of the largest compensation programs achieved by ASIC, with over $120 million in refunds to consumers,” Mr Kell said on Wednesday.