In a bid to drive better outcomes for consumers, the Australian Securities & Investments Commission (
ASIC) has commenced the consultation on reforms to the sale of add-on insurance and warranties through car dealerships.
The consultation paper, released yesterday by the corporate watchdog, proposes the following:
- A deferred sales model. This will give consumers extra time to consider whether or not they wish to purchase add-on insurance products or warranties. The proposal is that add-on insurance products can only be offered to consumers by car dealership intermediaries four to thirty days after the sale.
- Enhanced supervision obligations on insurers over their car dealership salespeople. This will provide insurers with specific requirements on how to supervise and monitor their authorised representatives selling add-on insurance.
“Last year we revealed sector-wide failings when it came to the sale of add-on insurance products through car dealerships,” ASIC deputy chair
Peter Kell said. “This consultation is about strengthening the regulatory framework so that consumers are not pressured into purchasing insurance they simply do not need or understand. It will also ensure compliance is not an afterthought, as compliance monitoring and supervision by insurers will be strengthened at the point of sale. I encourage feedback from all stakeholders on these important reforms.”
ASIC said it will also collect significant data from insurers involved in this sector, including claim ratios on add-on products, to enable better ongoing assessment of consumer outcomes.
The proposals would apply to all add-on insurance products sold in connection with the sale of a new or used car, except for comprehensive car insurance and compulsory third party insurance.
Submissions are welcome until Oct. 23, and can be sent to:
[email protected].
Related stories:
ASIC chair calls for BEAR expansion
ASIC unveils regtech showcase event
