Selling customers poor valued insurance products? GEEZ Greggie wake up for all our sake's you nong. This has been going on for years and you now have another attack of the “willbees”? Do not say will be!!! Just say we have done this today!!! That could work! Show us you have taken tough action for a change.
Consumers are understandably sick of JUST MORE SPIN!
ACCC’s Medcraft raps insurers for ‘appalling’ products
The Australian 12:00am February 18, 2017
Michael Roddan
Corporate watchdog chairman Greg Medcraft has attacked the insurance industry for selling “appalling” and “shocking” products that many in the sector would not buy themselves or recommend to family and friends.
The regulator also warned that it was not waiting for new product intervention powers and was increasing scrutiny of the general and life insurance industries.
Mr Medcraft said enforcement would be carried out “the easy way or the hard way” after the sector failed to take appropriate action to curb the sale of useless add-on insurance products.
His comments came as the Australian Competition & Consumer Commission rubbished an industry-formulated response to a scathing investigation of add-on insurance products sold by car dealers.
The watchdog said the sector’s proposed 20 per cent cap on commissions paid to car dealers would do nothing to prevent companies selling consumers “expensive, poor-value products”.
In a blistering speech to the Insurance Council of Australia conference in Sydney yesterday, Mr Medcraft said the Australian Securities & Investments Commission would be spending nearly half the extra $125 million in government funding it secured on putting “more cops on the beat” for surveillance in the insurance industry.
ASIC’s damning report into add-on insurance sold through car dealerships, such as credit insurance, gap insurance and walkaway insurance, showed the products were plagued by extreme rates of high-pressure sales tactics, inadequate information, sky-high commissions, and conflicts of interest. The review found a low claims ratio of less than 10c in the dollar and car dealers were receiving four to five times as much as consumers received in claims.
“Frankly these findings, to put it bluntly, are shocking,” Mr Medcraft said. “What we saw was appalling. Insurers here have designed expensive and extremely complex products that put consumers at risk.”
Speaking to The Weekend Australian after Mr Medcraft’s speech, Insurance Council chief Rob Whelan said the message was clear.
“The industry has got more work to do in this area,” he said.
“We put forward what we thought was a pretty comprehensive (effort) to try to address these sorts of issues. However, it’s clear the regulators ACCC and ASIC are not satisfied with those ideas and initiatives and we will have to do more work to address their concerns.”
In its draft determination on the planned commission curb by 16 insurers, ACCC chairman Rod Sims said “the proposed cap is unlikely to result in a public benefit”. “While insurers would benefit from a cap at the expense of car dealers, this conduct is likely to lessen competition between insurers, including by creating greater opportunities for explicit or tacit collusion and greater shared knowledge between insurers of competitors’ costs,” Mr Sims said.
“A cap on commissions does not address these issues and will not remove the opportunity and incentive for insurers and dealerships to sell consumers expensive, poor value products.”