Royal Commission add-on junk insurance reforms must be implemented industry-wide

Community legal centres are urging the Government to deliver on Commissioner Hayne’s recommendation that the deferred sales model for add-on insurance apply ‘industry-wide’.

The Final Report of the Financial Services Royal Commission recommended a deferred sales model for almost all forms of add-on insurance to help curb high-pressure sales tactics in the industry. The Government promised to implement the recommendation but is already looking to provide exemptions following pressure from the insurance industry.

This reform would stop salespeople pushing complex and poor value add-on insurance products on people at the point of sale. Treasury is currently consulting on whether any classes of add-on insurance products should be exempt from the deferred sales model reforms, due to commence on 5 October 2021.

Consumer Action Law Centre, Financial Rights Legal Centre and WEstjustice made a submission urging the Government to restrict exemptions to only the rarest of circumstances. Read the submission here.

“Junk and poor value insurance products have been sold using high-pressure tactics for years, often bundled in with the sale of another product like a car or flights,” said Consumer Action CEO Gerard Brody.

“These sales are often motivated by huge commission arrangements paid to retailers by insurers, leading to situations where retailers are incentivised to recommend poor value policies. We have seen these sorts of arrangements cause harm across all kinds of industries, which is why exemptions to this reform must be very limited.”

The Government has already announced its intention to exempt add-on travel insurance products from the model.

“Add-on travel insurance products have not provided good value to Australians in the past, and they don’t deserve an exemption.

“Treasurer Josh Frydenberg promised to take action on all 76 royal commission recommendations. We urge the Government to deliver on its promises and implement an industry-wide deferred sales model for add-on insurance, without exemptions and loopholes”, said Mr Brody.

“During the global pandemic many people have lost their jobs, lost their homes and struggled to make ends meet. This is not the time to loosen the reins on high pressure sales tactics or delay the implementation of important recommendations arising from the Financial Services Royal Commission,” said Westjustice CEO, Melissa Hardham

“Our focus should be on measures to enhance recovery opportunities for families and avoid further decline into poverty.” Ms Hardham said.



Media Contact: Mark Pearce, Consumer Action Law Centre, 0413 299 567,

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