A consumer body is calling for New Zealand’s regulators to take a closer look at insurance products sold via car dealers.
According to a report in the
NZ Herald, the call by Consumer NZ follows an Australian review which has forced insurers to refund millions to customers. However, the report added that the bodies which represent insurers and motor vehicle dealers believe there are no problems here.
Consumer NZ head of research Jessica Wilson told the publication that people who bought cars were regularly offered insurance and warranty products which may provide very little value.
“You can end up paying for cover you’re already entitled to by law,” Wilson reportedly told the publication. “We’re concerned these products continue to be sold with misleading information about the cover they offer and we’d like to see regulators take a closer look at this market.”
In 2016, the Australian Securities and Investment Commission released reports covering its review of the sale of add-on insurance through car dealers. The reports found the insurance was expensive, of poor value and provided consumers very little or no benefit.
Since then, five insurers have reportedly said they would pay back more than AU$120 million (NZ$131 million) to consumers. The products include insurance for tyres and rims, warranties, loan protection and guaranteed asset protection.
Motor Trade Association industry relationship manager Greig Epps told
NZ Herald that such policies were sold in New Zealand via car dealers but regulators might find the problems in Australia to be non-existent here.
Epps reportedly said a car dealer is often simply an “intermediary” for the insurance company and that consumers also needed to take responsibility.
Insurance Council of New Zealand CEO
Tim Grafton told the publication the council has not been made aware of any issues.
“
ICNZ has not been advised by either regulators or its members of the sale of insurance that is not fit for purpose,” Grafton said. “
ICNZ requires that its members do not bring the insurance sector into disrepute.”
The
NZ Herald also reported that New Zealand regulators have yet to look into the add-on insurance market.
“We have not been reviewing the practices around car loan insurance and to date have not received any complaints in this area,” a Financial Markets Authority spokeswoman told the publication.
The spokeswoman reportedly said that while all insurance services in New Zealand are subject to fair dealing rules under the Financial Markets Conduct Act, insurers are not licensed by the
FMA, which limits its remit.
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