Regulator to throw book at insurers
20 Feb 2017
The Australian Securities & Investments Commission (ASIC) has warned that it will use its full range of powers to seek better consumer outcomes in add-on insurance.
The warning was issued by Mr Greg Medcraft, ASIC Chairman, at the Insurance Council of Australia Annual Forum last Friday. He said that the findings from the corporate regulator's review last year of general insurance add-ons sold through car dealers are “to put it bluntly, shocking”. The review found, for instance, an overall claims ratio of 9% across the five products scrutinised.
He said: “Insurers have designed complex and extremely poor value products, and put their reputations at risk. And some of the most vulnerable consumers in society are paying the price.”
While the general insurance industry has put forward a range of proposals to address ASIC’s concerns, the regulator found that, overall, the proposals fall short of addressing the underlying issues.
ASIC is therefore carrying on its work on add-on insurance, including:
- introducing a deferred sales model;
- raising training standards for add-on general insurance products which are complex and poorly understood by consumers;
- holding insurers to account to deliver products that are designed with consumers’ genuine needs in mind and offer good value;
- enforcement action against individual insurers who have breached the law;
- public reporting on individual insurer outcomes and key value measures for consumers.
- Source: eDaily