Swann Insurance will refund over 67,000 customers a total of $39m paid for add-on insurance,
ASIC has announced.
The refund relates to add-on products bought via car and motorbike dealerships that were of “low or no value”, the regulator said.
Six different Swann add-on products will be refunded after ASIC found that it was unlikely customers would be able to claim on the policies as the insured value of the car was more than the amount borrowed in a loan.
“Add-on insurance has been under the spotlight because of significant problems with product design and sales,” ASIC Acting Chair
Peter Kell said.
“Insurers should be taking active steps to ensure their customers are not being sold products that provide little or no value."
ASIC also found that some customers paid twice for roadside assistance, under two different policies, others were sold a more expensive level of cover than they required and life insurance was sold to younger people who were unlikely to need the cover.
In response to concerns raised by ASIC, Swann will also refund the premiums paid by customers who claimed on their comprehensive car insurance and obtained a replacement vehicle, as well as those who’s policies had little of negative value.
Customers who paid their loans off early will be partially refunded the insurance premium from the date the loan was paid and partial refunds will also be given to customers who were oversold cover.
“ASIC's work to fix add-on insurance through the car dealership channel is all about making sure customers are being sold insurance that meets their needs,” Kell continued.
“Where customers have been sold inappropriate add-on products then remediation should be provided, and we are announcing a series of substantial remediation programs with insurers.”
Swann will contact affected customers via email or letter by September 30 2018, with the insurer set to make a community benefit payment after that date for refunds that remain uncollected.
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