Insurance provider QBE has paid out $15.9 million in refunds to car insurance customers who were receiving little to no benefit from their policies, following a review from the Australian Securities & Investments Commission (ASIC).
According to a statement released by ASIC, the refund’s recipients were the more than 35,000 customers who bought QBE Guaranteed Asset Protection (GAP) and Consumer Credit Insurance (CCI) through car dealerships around Australia between 2011 and 2017.
ASIC found that QBE’s GAP insurance, which covers car owners for the difference between what they owe on the car loan and what the car is insured for if the car is written off, provided little benefit to these customers, as it was sold in cases where there was unlikely to be a gap between the insured value of the car and the loan balance (e.g. where the customer paid a large deposit), or duplicated existing cover held by consumers, or provided consumers with more insurance than they needed.
As part of a wider CCI crackdown, ASIC found that QBE’s Consumer Credit Insurance, which provides some cover to meet the consumer’s loan repayments if they die, suffer a traumatic illness (such as cancer), or become disabled or unemployed, was sold to young people who had no dependents and who were unlikely to need the cover.
According to ASIC deputy chair, Peter Kell, the QBE refund is a direct result of ASIC’s 2016 add-on insurance review, which uncovered the wide-spread sale of insurance with little or no value to consumers.
“Insurance must meet the needs of the consumer first and foremost. All add-on insurers should review the sale of policies and refund consumers who were sold policies they didn’t need.”
ASIC is understood to be currently working with other insurers to achieve similar outcomes where similar conduct occurred.