Consumers are being sold expensive, poor value insurance coverage items which offer them with little or no advantage, a scathing evaluation by the Australian Securities and Investment Commission (ASIC) has discovered.
The three-year review took a look at the sale of add-on insurance coverage through car dealers.
Add-on insurance coverage items are sold to consumers when they buy a brand-new or used vehicle at a dealership and include tire and rim insurance, mechanical breakdown insurance and extended warranties.
ASIC deputy chairman Peter Kell stated there were numerous concerns about the industry
“There are major problems in this market that have to be right away and comprehensively attended to by insurance companies,” he stated.
“ASIC will be carrying out further work, including prospective enforcement action to make sure that this market delivers acceptable outcomes for customers.”
Commissions received by automobile dealerships for offering this kind of insurance were a major driver, with salespeople earning $602 million which is over 4 times what consumers received in insurance.
The report likewise discovered customers paid $1.6 billion in premiums and got only $144 million in successful claims.
Payment for this kind of add-on insurance coverage was frequently packaged into the consumer’s auto loan as a single upfront premium, which could bump up the expense of the instrument by increasing the loan quantity and interest paid.
