Kiwibank is the last of the major banks to sell credit card repayment insurance amid class action lawsuits and regulators’ criticisms in Australia.
Kiwibank, which charges 74c per $100 of debt for credit card repayment insurance, said it changed the product last year to increase the number of accepted claims but stopped “proactively” marketing it.
“Kiwi Insurance doesn’t proactively market credit card repayment insurance, and staff are not incentivised in any way for selling it,” Kara Tait, spokeswoman for Kiwibank, told Stuff.co.nz.
“Customers are made aware of the product when they apply for a credit card, and they choose if they want to take out the insurance. Customers receive regular communications to ensure they understand the policy and that it continues to be right for them.”
The Financial Markets Authority (FMA) has pushed for laws that would ban the sale of poor-value insurance products and would ensure that banks and insurers treat customers fairly.
Liam Mason, director of regulation at the FMA, commented that credit card repayment insurance is less likely to be valuable to customers.
“We see this from the performance of the products, whether in terms of loss ratio or declinature rates,” he explained, as reported by Stuff.co.nz. “We also saw clear evidence of poor outcomes for customers from some of these products. Of concern, we see some are being sold to customers without their understanding of the limitations.”
