Government crackdown on dodgy insurance sales could save Australians millions
When insurance is added onto the sale of another product or service, consumer groups reveal that it’s likely to be a rip-off. This comes in the wake of the Australian Government’s consultation on how to reform the sale of add-on insurance as recommended by Commissioner Hayne.
Consumer Action has welcomed the move by the Government to tackle the problem of add on insurance in its joint submission with seven leading consumer groups.
“Every day, millions of unassuming Australians are sneakily sold insurance that they don’t want or need,” says Consumer Action Senior Policy Officer, Cat Newton. “It’s smuggled in with a big-ticket purchase, like a home loan, flights or even a family pet. We’ve all been there – trying to book a holiday or buy a car, and at the last minute the salesperson will convince you that you should also purchase insurance because it’s the responsible thing to do.”
Newton says that Australians have had enough with low-value add-on insurance, with thousands of Australians using DemandARefund.com to demand more that $5 million worth of refunds. “100% of users said that they would never have purchased the insurance had they known what they were really being sold.”
Consumer Action welcomes the Australian Government’s intention to crack down on the great Australian rip off that is add-on insurance.
The reform would prevent salespeople from being able to bundle junk insurance in with the sale of a primary product by requiring a break in the sale process. This break is critical, as it gives consumers time to assess the value and suitability of the insurance.
“The Government’s proposal will prevent salespeople from being able to flog insurance at the same time as a big-ticket purchase. It’s promising that the Government is working to give people the time they need to properly consider the insurance they’re buying, away from high-pressure sales tactics, motivated by eye-watering commissions.”
Newton says that the Government’s proposal needs strengthening to make sure the reforms work. Consumer groups have called for:
- the break in the sales process to start once the primary good is bought, financed and delivered to prevent another pressure-sale opportunity when a person returns to sign any loan documents or collect the car.
- salespeople to not to be able to over-ride the deferral period though a ‘customer-initiated purchase’ which is open to abuse.
- an increase in the deferral period to at least 7 days.
“It’s baffling to see the Insurance industry attempting to derail the quick implementation of these reforms. The data is in, the harm is clear and now more than ever we need strong law reform to protect Australians from this rort.”
For more information see the joint consumer submission: https://consumeraction.org.au/reforming-the-sale-of-add-on-insurance
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