Last week, the royal commission released the confessions and Money has identified just a small representative sample of the confessions of the general insurers.
While most of the affected customers have been compensated, this is still ongoing with some other matters.
Other areas of financial services, like financial planning and superannuation, have tougher laws and regulations in place to protect consumers.
As consumer group Choice said in its submission to the royal commission about general insurance, consumers are presented with long and complex terms and conditions and expected to understand them.
As it is very much buyer beware, that makes the product disclosure statements (PDS) even more important; more so given that insurance is particularly complex.
However, Choice notes it requires high levels of time and comprehension to come to grasp with the detail of a policy.
āFor many, reading beyond the exclusions on the key fact sheet or cover page will be the limit to their ability to engage with long product disclosures … where a definition can be hidden 100 pages deep in a PDS,ā Choice said.
For the period from November 20, 2013, to November 11, 2014, the insurer failed to apply a discount to 2097 customers who purchased third-party car insurance, in accordance with the offer on its website.
In another matter, the insurer discovered in February 2017 that the PDS for its credit card travel insurance erroneously stated the travel insurance could be extended to cover pre-existing medical conditions upon approval by the insurer and payment of an administration fee.
More than 2700 customers were charged an additional premium instead; which was more than the administration fee they would have paid for the extended cover.
In 2012 the insurer identified 221 customers who did not receive a refund on vehicle excesses after they had been reclassified from being “at fault” to “not at fault”.
This meant the excess for the claim that was initially collected needed to be refunded to the insured. The āexcessā is the first part of a claim that is self funded. The customers were each refunded $694 on average.
In another matter, in December 2014, the insurer applied a 10 per cent premium discount to clients instead of the 20 per cent to which they were entitled. Almost 800 customers were affected. They were refunded a total of $63,896 between them.
The insurer had advertised that its insurance provided cover from $1.58 per day. Hollard said in its confession to the royal commission that it ādiscovered that a reasonable number of customers could not obtain cover at the advertised priceā and stopped the advertising.
PetSure charged policy cancellation fees to some customers where the fees were not in the product disclosure statements.Credit:Dion Georgopoulos
In another matter, Hollard Insurance-owned PetSure Australia charged policy cancellation fees where premiums are payable annually to cover administrative costs of cancellation and provide a part-premium refund. However, the cancellation fee was not disclosed in some of the PDSes.
In February 2016, the insurer identified a production error with the electronic documents for Coles home insurance customers (of which IAG is the insurer) and the electronic PDS only showed the front and back pages. The error affected customers who took out the insurance between December 12, 2015, and February 23, 2016.
Of the 5710 customers affected, 1971 received a hard copy PDS in the mail in addition to the partial electronic PDS, leaving 3739 customers who received the partial electronic PDS only.
In May 2015, following a customer inquiry, QBE became aware it had failed to give effect to the terms of a statement in a PDS, relating to the allocation of Qantas Frequent Flyer Reward Points to those policyholders who purchased QBE Travel Insurance between October 1, 2010 and February 1, 2015.
QBE contacted and sought to allocate the appropriate points to 7442 customers, but 1113 customers were not able to be allocated their points due to data-related issues.
A Suncorp subsidiary reported to the Australian Securities and Investments Commission in August 2014 that more than 20,000 comprehensive car insurance customers who had selected a “Protected No Claims Bonus” option for an additional premium continued to be charged the additional premium after they had qualified for a Lifetime No Claims Bonus.
That was inconsistent with the intention of the policy and statements made in the PDS. Affected customers were contacted and provided with refunds of about $2.7 million.
Between March 2009 and September 2013, Youi failed to apply or delayed in applying a discount for multiple policy holders (multi-policy discount or MPD). The MPD was available to holders of home contents insurance and motor vehicle insurance with Youi, with the home contents policy being eligible for a 20 per cent discount.
Youi later identified a further category of customers potentially entitled to a MPD, which were not identified by the initial remediation plan: those customers who purchased or renewed a vehicle policy on or after March 5, 2015, and held a home contents policy from prior to March 9, 2010, which was renewed after March 5, 2015.
A total of 11,250 policies were affected, including both active and cancelled policies.
Writes about personal finance for Fairfax Media, Sydney, Australia.
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