One of the rare upsides of not being able to travel internationally is not having to negotiate travel insurance policies in an effort to decipher what provides good coverage and what is a rip-off.
Fortunately, though, the Australian Securities and Investments Commission (ASIC) is still hunting down and prosecuting those who use deceptive tactics to try and sell bad travel insurance or sell cover in an opaque or deceptive manner.
Recently it brought a case against Allianz and AWP, which resulted in the Federal Court ordering them to pay penalties of $1.5 million for misleading sales made through travel website Expedia.
The court found that the two companies engaged in misleading and deceptive conduct when selling travel insurance by failing to correctly state how premiums were calculated and by allowing insurance to be sold to ineligible customers.
ASIC deputy chair Sarah Court said that the industry needed to be transparent and accurate when selling insurance products.
The court also found Allianz and AWP had breached their financial services licence obligations by:
- Allianz failing to correctly disclose how premiums were calculated in product disclosure statements, so that consumers were not given accurate information on the travel insurance they were purchasing
- Allianz and AWP failing to prevent the sale of insurance on Expedia websites to consumers who were ineligible to make claims under the policies, and
- Allianz and AWP failing to prevent Expedia websites from misusing a quote from the Department of Foreign Affairs and Trade about the importance of purchasing travel insurance.
“The community expects that the insurance industry will promote and sell products in a transparent way,” Ms Court said. “People take out travel insurance for peace of mind and to protect their families.
“The value of an insurance policy is in the promise – that a consumer can feel confident and secure that they will be looked after if something goes wrong. ASIC remains committed to ensuring that consumers’ experience matches that expectation.”
In his decision, Chief Justice James Allsop said the penalties ($1.14 million for AWP and $360,000 for Allianz) would deter other insurers from using such practices in future.
“Where the contravening companies are large, powerful companies that have demonstrated a corporate culture failing to give primacy to compliance with financial services laws, the proposed penalties fall within the appropriate range to deter Allianz and AWP from engaging in similar conduct in the future,” he said “and to deter the sector more generally from adopting a lax attitude towards compliance.”
Have you ever bought travel insurance and found you were ineligible to make a claim? Were you able to challenge the insurer in court? Why not share your experience in the comments section below?
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