Junk insurance victims fight back as ASIC report damns industry
Australians sold junk insurance are demanding their money back as ASIC releases a damning report into the atrocious value and shocking sales practices at car yards.
The ASIC “A market that is failing consumers: The sale of add-on insurance through car dealers” report says:
– Over 3 years, the claims payout ratio was only 9 cents for every dollar of premium paid (compared to 85c for car insurance).
– Over the same period, insurers paid 4.2 times more in commissions to car dealers ($602.2m), than in claims for these products (only $144m in claims).
– Add-on insurance is often unnecessary, overlapping with other protection, or is sold to Australians who are ineligible to claim.
The Consumer Action Law Centre says anyone who has recently bought a car, gotten a credit card or a loan should check their paperwork immediately for junk.
“It was my first credit inquiry and I didn’t really know what to expect” says Caitlin a 26 year old from Brisbane who made a complaint through DemandARefund.com.
“I’d never really had a loan and the conversations were a bit off. They said it’s important to have these insurances, but it just didn’t seem right. They made it sound like it was part and parcel of getting a loan with this particular provider. It was more than one staff member that made it very clear there wasn’t an opportunity to back away from that insurance.”
Caitlin is now pursuing the matter through the Financial Ombudsman Service.
Consumer Action’s DemandARefund.com helps victims of junk Consumer Credit Insurance, Gap Insurance and Used Car Extended Warranties to generate a letter to demand their money back. Australians have demanded back over $300,000, with more fighting back every day.
“Flogging junk insurance has been going on too long” says Gerard Brody, CEO of Consumer Action Law Centre.
“There are reports going back decades telling us how bad these insurance products are. Sales of similar products in the UK led to a multi-billion-dollar scandal. The game is up and this is just the start of our campaign to get justice for victims of junk insurance. A business model that relies on commission driven sales, products with little to no value and in many cases illegal selling needs to be stamped out now.”
Australians can use DemandARefund.com to help identify whether they have junk insurance and can use the site to generate a letter of demand to ask for a refund.
Quotes attributable to Gerard Brody, CEO Consumer Action Law Centre:
“We’ve helped Australians demand over three hundred thousand dollars back, but there’s still millions of dollars worth of policies owed to victims of these atrocious practices”
“This report is further evidence of how commission sales lead to poor outcomes. Any Australian who’s shopped in a car yard needs to check their paperwork and fight back.”
Quotes attributable to Caitlin (26 year old from Brisbane)
“I felt like a bit of an idiot to be honest. I have a degree and I consider myself to be quite educated. I felt like I was taken for a fool. At the time had I known it was optional I could have said no. Because I wasn’t given that inclination, I did myself a disservice. I also felt like an idiot because part of those insurances were for death and disability and I was already covered for that under my superannuation so I was effectively paying twice for the same insurance.”
Caitlin is available to speak after 4pm EST. Contact Jonathan Brown (details below)
Consumer Action has victims of junk insurance and extended warranties available for print media comment and has released a video explaining the issues with these products.
Jennifer and Glen Conopo share their experience – Video (Jennifer and Glen are not available for interview)
Zane shares his story with an extended warranty – Video (Zane is not available for interview)
Attached photo: David Leermakers and Philippa Heir.
Media Contact: Jonathan Brown, 0413 299 567, firstname.lastname@example.org