Allianz Dodgy Product - Australia

The Australian Securities and Investments Commission (ASIC) on Tuesday said more than 15,000 customers of the global insurance giant would be getting refunds for consumer credit insurance (CCI), a product that has already left the industry facing a $100 million compensation bill, and the threat of legal action.

CCI was sold within banks and financial institutions to cover consumers against the risk of being unable to pay back their debts if they died, were sick or injured, or lost their jobs. But the product was often sold inappropriately, leaving many with worthless cover, while others were paying premiums for insurance they did not need.

The refunds being paid by Allianz, a German insurance giant, relate to cover that was sold to people who were aged under 21; policies sold to people who were ineligible to claim; and policies that came with poorly disclosed fees.

As well as paying refunds, Allianz is pulling out of the market for CCI, which has been repeatedly highlighted by regulators as an example of poor conduct by the insurance industry.

ASIC said Allianz had sold policies to "customers under 21 years of age who were unlikely to need that cover," and it would be refunding all premiums it charged these people between 2011 and the end of 2018.

For those people in this age bracket who bought cover and still have active policies, Allianz will preserve the existing cover without charging premiums.

"Disappointingly, our work on the sale of CCI has highlighted widespread mis-selling and poor product design.  This remediation outcome is only one of many examples where CCI has failed consumers," ASIC Commissioner Sean Hughes said.

"We expect insurers to cease to sell insurance products that provide little or no value."

Allianz is also paying refunds and committing to re-assess claims to customers who were sold unemployment or disability cover, even though they were ineligible to make a claim at the time of sale. It is also refunding administration fees that were charged "without adequate disclosure" to people paying premiums by the month.

An Allianz spokeswoman said the insurer undertook a review of its CCI product last year, and it had notified ASIC about the problems, which related to mortgage and loan insurance.

"We regret that in this instance some of our customers may have ended up with products that have not been entirely suitable and we are committed to a customer first approach and taking the necessary action to make this right," the spokeswoman said.

"As such, we have decided to withdraw from the sale of all CCI products by the end of Q3 2019, and have already communicated this decision to our partners."

An ASIC review last month found CCI was "extremely poor value for money," noting only 19¢ in every dollar paid in premiums had been paid back in claims, and that the cover had been sold to customers ineligible to use it.