More than $60 million will be refunded to 110,000 customers by Allianz and Suncorp after ASIC found they were selling insurance "of little to no value".
This brings the total of add-on insurance refunds to $120 million, since ASIC conducted a review of the category in 2016.
Allianz's refund of $45.6m is the largest secured to date – surpassing the
$39m returned by Swann Insurance and the $15.9m from QBE in late
2017 – and yet the total will likely be higher as it does not include the cost of interest.
"The refunds offered by Allianz, together with those from other insurers,
make up one of the largest compensation programs achieved by ASIC," says
acting chair Peter Kell.
"Our message to insurers is simple: the needs of your customers must come
first in the design, price and sale of your products."
Allianz will be issuing refunds for four of its add-on products, which were
sold to 68,000 people between 2010 and 2017.
Suncorp will have to refund $17.2m to 41,428 people, who were
sold add-on insurance through its MTA brand between 2009 and 2017.
Both insurance companies will have to make donations to social causes. Allianz will pay $175,000 to a financial literacy organisation, while Suncorp's MTA will be making a $50,000 'community benefit payment'.
The policies were sold through car dealerships nationwide and often weren't
suited to the people buying them.
One of the insurance products sold by Allianz was to customers who would be
ineligible to lodge a claim. Another provided a warranty, even though the
car they bought came with a seven-year warranty from the manufacturer.
Both Allianz and Suncorp's MTA sold life insurance policies to people who would not
necessarily need them as they were single and under the age of 26.
Allianz says the refund program is part of an initiative it has been
working on since last year.
"Allianz is committed to providing options for insurance cover that are
accessible and transparent, and which provide value for customers," the
company says in a statement. "We have identified some policyholders that
purchased cover which may not have been suited to their circumstances and
others that did not notify us to cancel their cover."
The company says it is still confirming the identity and contact details of
the people affected, but plans to write them by April 2018. MTA has already started writing affected customers.