A broker has called for more regulations for add-on insurance to help protect clients and the industry.
As insurance becomes more widely distributed through a host of third parties, David Coe, managing director of Northwest Insurance, said that more needs to be done from a regulatory standpoint.
“I would like to see tighter regulations on car yards and the like,” Coe told
Insurance Business. “Also, the banks offering products, particularly insurance products.
“We are getting a lot of people coming back to us from the banks that are very unhappy about the way that they have been treated.”
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Coe called for regulation or audits into third-party insurance businesses to ensure that customers are being treated fairly.
Last year,
ASIC made it known that they were putting insurers on notice over the sale of add-on insurance through car dealers.
A report released by the regulator found that consumers were being sold expensive products that had little benefit for consumers in a pressure-filled sales environment rife with high commissions.
It was found that consumers paid $1.6 billion in premiums for add-on insurance, receiving only $144 million in successful insurance claims – a payout of just 9%.
“There are serious problems in this market that need to be immediately and comprehensively addressed by insurers,” ASIC deputy chair,
Peter Kell, said at the time.
The Australian Competition and Consumer Commission (ACCC) is set to make a draft determination on the commissions generated by the car dealership industry, related to add-on insurance, in the not too distant future with the insurance industry seeking a commissions cap.
Related stories:
Car dealers oppose insurance cap
ICA propose enhancements to add-on insurance products
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