The remediation follows a review by ASIC into the sale of CCI by lenders, which has since resulted in refunds of more than $100 million to over 300,00 affected customers.
Allianz has already refunded $45.6 million to 68,000 customers in 2018, for add-on insurance sold through car dealerships that of little or no value.
Its current refund relates to the sale of cover to consumers who were ineligible to make a claim for unemployment or disability as well as the sale of death cover to customers under 21 years of age who were unlikely to need that cover.
The insurer will also be making up for the charging of fees to customers who paid premiums by the month without adequate disclosure.
The remediation program covers certain CCI products issued by Allianz including mortgage and loan protection policies sold through financial institutions.
The CCI products provided cover against the risk of consumers being unable to meet loan commitments because of death, injury, illness or involuntary employment.
Currently, ASIC is consulting on its proposal to ban the sale of CCI and direct life insurance through unsolicited telephone calls – aiming to stop unfair sales to consumers who do not need, want or understand the products.
We need a financial system that is fair: ASIC
The regulator has commenced investigations into a number of companies that have been involved in misselling CCI.
ASIC commissioner Sean Hughes said ASIC’s work on the sale of CCI had highlighted unfair sales conduct and poor product design.
“This remediation outcome is only one of many examples where CCI has failed consumers,” Mr Hughes said.
“We need a financial system that is fair. Insurers and other financial institutions need to rise to the challenge and embed the principle of fairness into their business to ensure we do not see any further instances of this kind of poor value product being pushed on to consumers.”
Although Allianz is no longer issuing new CCI policies from 30 September, it will continue to fulfil its obligations to existing CCI policyholders.
“We expect insurers to cease to sell insurance products that provide little or no value,” Mr Hughes said.
How Allianz is conducting its remediation
To address the issues, Allianz is refunding premiums charges plus interest for policies sold between 2011 and 2018 for ineligible sales of unemployment and disability cover and death cover to customers under 21 years of age.
The company will be reassessing all withdrawn and declined claims where the consumer was ineligible for unemployment and disability policies at the time of sale and inviting customers to submit a claim if they have not already done so, with Allianz to pay valid claims plus interest.
Allianz will continue to honour active policies and not rely on employment eligibility criteria as a basis to decline an unemployment or disability claim.
For sales of death cover to customers under 21, Allianz will be preserving existing cover for active policyholders on current terms without charging for it.
Looking at monthly policy payment customers, the insurer will refund all administration fees and loading charged plus interest and correct any future direct debit amounts.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
