A broker has called for more regulations for add-on insurance to help protect clients and the industry.
As insurance becomes more widely distributed through a host of third parties, David Coe, managing director of Northwest Insurance, said that more needs to be done from a regulatory standpoint.
“I would like to see tighter regulations on car yards and the like,” Coe told Insurance Business.
“Also, the banks offering products, particularly insurance products.
“We are getting a lot of people coming back to us from the banks that are very unhappy about the way that they have been treated.”
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Coe called for regulation or audits into third-party insurance businesses to ensure that customers are being treated fairly.
Last year, ASIC made it known that they were putting insurers on notice over the sale of add-on insurance through car dealers.
A report released by the regulator found that consumers were being sold expensive products that had little benefit for consumers in a pressure-filled sales environment rife with high commissions.
It was found that consumers paid $1.6 billion in premiums for add-on insurance, receiving only $144 million in successful insurance claims – a payout of just 9%.
“There are serious problems in this market that need to be immediately and comprehensively addressed by insurers,” ASIC deputy chair, Peter Kell
, said at the time.
The Australian Competition and Consumer Commission (ACCC) is set to make a draft determination on the commissions generated by the car dealership industry, related to add-on insurance, in the not too distant future with the insurance industry seeking a commissions cap.
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