This submission is made by Consumer Action Law Centre, Financial Rights Legal Centre and WEstjustice.
We oppose any exemptions for classes of add-on insurance products from the deferred sales model (DSM) without extremely strong evidentiary justification. Implementing an industry wide DSM for add-on insurance was one of the key recommendations Commissioner Hayne made for the insurance industry.
Known behavioural biases inherent in the add-on sales process have been long exploited by the insurance industry and their retailing partners, which have prioritised making a quick buck over selling suitable insurance products that people want and need. The sale of these products continues to cause significant consumer harm, particularly in situations where excessive commissions are being paid to retailers for pushing poor value – and sometimes worthless – insurance products.
In addition to this submission, our previous submissions made to consultations on Treasury’s 9 September 2019 Proposals Paper on add-on insurance, and the exposure draft legislation in 2020 that proposed the DSM, also contain information relevant to this issue.
Read the submission (PDF).210215_DSM_exemptions_CALC_FRLC_WJ (1)