Powered by MOMENTUM MEDIA
subscribe to our newsletter

Customers ‘misled’ on home building insurance

Insurance giant AAMI, part of the Suncorp Group, has paid $43,200 in penalties for making “false or misleading statements” in several of its adverts for home insurance.

According to ASIC, AAMI’s promotion of its Home Building Insurance Complete Replacement Cover stated that AAMI would repair or rebuild the insured house, no matter the cost to AAMI.

The statements were made on AAMI’s website and radio advertisements for home insurance.

However, ASIC was alerted to the insurance being potentially misleading after concerns were raised by Sarah Henderson MP, the federal member for Corangamite, following the Wye River bushfires in 2015.

As part of its review, ASIC engaged with several other consumers who had disputes with AAMI after the 2015 Wye River bushfires.

Advertisement
Advertisement

ASIC highlighted that the statements in some of AAMI’s adverts gave the impression that AAMI would itself always take the necessary steps to repair or rebuild a home when a claim was made.

According to the financial services regulator, the statements were “misleading because they did not disclose that, while AAMI could choose to arrange the repair or rebuild of the insured house, it could also choose to pay the policyholder the assessed cost of repairing or rebuilding the house, leaving the policyholder to arrange the repair or rebuild”.

AAMI amended its advertising after ASIC raised its concerns, but the regulator issued four infringement notices for representations that appeared on AAMI’s website (during the period of 7 November 2016 to 19 July 2017) and via radio broadcasts (during the periods of 7 November 2016 to 31 December 2016, and 16 January 2017 to 17 March 2017).

Acting ASIC chair Peter Kell said this week that it is imperative for insurers to be clear with potential customers about what the insurance covers and how claims will be paid.

He said: “Customers decide to take out a particular type of cover based on what is advertised.

PROMOTED CONTENT


“While we recognise that AAMI offers a type of home building policy that can help reduce the risk of underinsurance, advertising must not mislead consumers.”

AAMI has now settled all remaining claims for Wye River.

Following ASIC’s inquiries, AAMI will also revise its disclosure documents to better inform consumers about the claims process for its Complete Replacement Cover, particularly when a cash settlement is provided.

[Related: ANZ to pay $50m over ‘unconscionable conduct’]

Customers ‘misled’ on home building insurance
mortgagebusiness

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The prudential regulator has written to ADIs to ensure that they are proactively managing lending risks and focusing on lending standards am...

As it waits for APRA to approve its acquisition of MyLife MyFinance, Challenger has flagged plans to expand the bank’s lending remit to co...

Australia has the second-highest mortgage debt as a proportion of GDP among OECD nations, according to a new report. ...

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.