ASIC to probe travel insurance

Australia’s corporate watchdog is considering a review of travel insurance after the finance sector’s recently-formed complaints body reported that the use of exclusions for medical conditions was a persistent cause of travel insurance disputes.

Insurers have been criticised of including terms in their policies which allow them to reject otherwise legitimate claims because a customer had a medical condition prior to the policy being taken out.

Michael Saadat, executive director of financial services at the Australian Securities and Investments Commission (ASIC), said the regulator is planning further scrutiny of operators in the sector that has one of the most complained-about financial products, The Sydney Morning Herald reported.

“We are scoping a review of the travel insurance market this year,” Saadat told the publication, as he noted that the wording in travel insurance policies is often what makes it difficult for policyholders to make a claim.

The ASIC probe of the travel insurance sector, which the regulator said is currently in its early stages, may look at the sector's use of exclusions relating to health conditions.

John Price, the Australian Financial Complaints Authority’s (AFCA) lead ombudsman for general insurance, said most travel-insurance complaints received by the EDR body were “probably” those related to pre-existing medical conditions.

“Often the exclusions contained in insurance policies, travel insurance policies in particular, are quite broad,” Price told SMH, as he identified claims for stolen luggage where an insurer said the bags were left “unattended,” the loss of expensive jewellery that was not declared when taking out the policy, and injuries to unlicensed motorbike riders as among the common disputes.

Price said that since AFCA’s launch in November, the number of complaints about travel insurance remained broadly flat. In contrast, complaints across all of AFCA, which also deals with banks and wealth companies, saw a 40% increase.

Campbell Fuller, the Insurance Council of Australia’s (ICA) general manager of communications, said the industry body and its members will assist ASIC if the corporate watchdog “determines a travel

insurance review is required,” SMH reported.