The Supreme Court of New South Wales has convicted and fined Allianz Australia Insurance Limited and AWP Australia Pty Ltd a total of $16.8 million for making false or misleading statements regarding their travel insurance products.
Allianz received a $13.5 million fine for six counts of disseminating false or misleading information, while AWP was fined $3.3 million for one count of misleading dissemination. The court ruled that between 2016 and 2018, both companies published misleading information on Allianz’s domestic and international travel insurance web pages, misrepresenting the level of coverage available to consumers.
The court found that Allianz’s website promoted maximum travel insurance benefits without adequately disclosing sub-limits, terms, conditions, or exclusions that could significantly impact coverage. This omission potentially misled customers into believing they had more extensive coverage than was actually provided.
The court ruled that between 24 November 2016 and 12 June 2018, AWP disseminated misleading information on its Purchase Path, which it ought reasonably to have known was materially misleading and likely to induce consumers to purchase financial products. Similarly, between 11 February 2016 and 6 June 2018, Allianz published false or misleading statements on multiple travel insurance landing pages on its website. These statements misrepresented the level of coverage available and were likely to influence consumers’ purchasing decisions.
Justice Stephen Rothman, in his ruling, underscored the responsibility of corporations to ensure proper oversight.
“It is important that corporations take the steps at the highest level to ensure that proper processes are in place which prevent breaches of this kind… these breaches were essentially caused by a desire not to expend the necessary monies to ensure proper oversight of that which is published by the company,” he said.
Australian Securities and Investments Commission (ASIC) deputy chair Sarah Court emphasised the importance of transparency in the insurance industry.
“Today’s ruling highlights the critical need for the insurance industry to be transparent and accurate when selling and promoting their products,” she said. “ASIC was concerned that thousands of customers were exposed to the risk that they might obtain insurance that they believed offered far more cover than they believed it did.”
In addition to the financial penalties, Allianz and AWP are required to cover the ASIC investigation costs. The matter was prosecuted by the Commonwealth Director of Public Prosecutions following ASIC’s investigation.
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