Being duped by an over-eager car salesman into buying insurance for your car that you most likely don’t need isn’t something any of us wants to admit.
But it seems we’re not alone.
The Australian Securities and Investments Commission (ASIC) has taken aim at Australia’s largest insurance companies for recommending “disappointing” proposals in a bid to overhaul exploitive car insurance products.
ASIC has reprimanded the sector for providing insufficient proposals which were of “little or no benefit” to consumers.
The Australian reported today that it had obtained a letter sent to the Insurance Council of Australia in May under the Freedom of Information laws.
In the letter, ASIC senior manager Emma Curtis said the watchdog had a number of “high level” concerns about the sector’s proposals including the fact that the proposals were “too narrow in scope” and failed to “place sufficient emphasis on addressing root causes of the issue”.
“Where there are stated time frames, these are often unacceptably long, and there is no explanation as to why more speedy progress is not possible,” Curtis wrote.
“Given the industry has been on notice for a significant period of time, this is disappointing and not indicative of industry commitment to making changes quickly.”
Curtis said the sector’s neglect in terms of setting a timeline for when customers who were sold useless insurance would be compensated “reflects poorly on the level of commitment or engagement by ICA members”.
Last year, ASIC’s damning investigation into the sector saw insurers proposing a 20 per cent cap on commissions paid to car dealers but ASIC chairman Greg Medcraft said that would do nothing to prevent companies selling unsuspecting consumers “expensive, poor-value products”.
The 2016 industry-wide review by ASIC found extreme rates of high-pressure sales tactics, inadequate information, sky-high commissions and conflicts of interest were all used by dealerships to sell consumers credit, gap and walkaway insurance.
The review found car dealers were receiving commissions four to five times as much as consumers received in claims despite an extremely low claims payout of less than 10 cents for every dollar charged in premiums.
It was found many people were sold products which they weren’t even eligible to claim.