General insurer Virginia Surety will refund more than 500 customers over $330,000 in premiums,
ASIC has said.
The insurer will offer refunds and will have a condition placed on its Australian financial services licence, for improperly selling consumer credit insurance policies.
From June 18, 2013 to December 31, 2015, Virginia Surety sold consumer credit cover, a bundled add-on which includes both life and general insurance, to customers taking out loans at car yards in Queensland and New South Wales.
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ASIC found that the insurer had stated that the life cover in the add-on policy was underwritten by TAL Life, without TAL’s permission, leaving customers at risk that claims could be rejected even for paid policies.
ASIC placed a condition on Virginia Surety’s AFSL so the firm has to refund the life premium paid by affected customers and engage an independent external compliance expert approved by ASIC to review compliance practices and report to the regulator.
Peter Kell, ASIC deputy chair, said that consumers should have confidence when purchasing insurance cover that claims will be recognised.
“The fact that Virginia Surety was selling this insurance without the life insurer’s approval indicates serious deficiencies with its compliance,” Kell said. “We have put all insurers in this market on notice that they need to change their practices and ensure they are properly considering the interests of consumers.”
TAL has agreed to honour the life cover for those consumers with impacted policies and pay claims even though consumers will receive a refund from Virginia Surety.
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