After a detailed review into questionable insurance sold through car dealerships, the Australian Securities and Investments Commission (ASIC) announced that insurance giant QBE Group will be required to refund $15.9 million in insurance premiums to more than 35,000 customers. The regulator found the insurance policies sold were of “little or no benefit” to consumers. QBE has started identifying affected customers and will be reaching out to them to offer refunds over the coming months.
According to ASIC deputy chair Peter Keller, “Insurance must meet the needs of the consumer first and foremost.”
There are two types of add-on insurance cover sold to car buyers that ASIC believe provide “little or no benefit”: Guaranteed Asset Protection (GAP) insurance and Consumer Credit Insurance (CCI). The former covers the short-fall between the car loan amount and the amount a car is insured for if it is written off, and is considered unlikely to be needed as it overlaps with other insurance products which customers already hold. As for CCI, which covers car loan repayments if the borrower is left without an income source or dies, it was sold to young people without dependents, who are unlikely to need it.
"ASIC announced that insurance giant QBE Group will be required to refund $15.9 million in insurance premiums to more than 35,000 customers. The regulator found the insurance policies sold were of "little or no benefit" to consumers."
It would seem however, that consumers are becoming more aware when it comes to CCI, with RFi Group data showing that the proportion of car loan holders holding such insurance has declined in the past year from 15% to 11% this June.