Recent natural disasters have demonstrated the importance to consumers of adequate home and contents insurance, ASIC deputy chairman Peter Kell said.
“Purchasing home insurance should not be considered an afterthought, as it is vital for consumers to fully understand the type of product they are purchasing,” he said.
“ASIC's reports make it clear that the home insurance industry can implement measures that will meaningfully improve consumers' understanding of their policy, and help ensure consumers buy a product that meets their needs.”
ASIC yesterday released two reports on the subject: Review of the sale of home insurance (report 415) and Insuring your home: Consumers’ experiences buying home insurance (report 416).
Report 415 is an ASIC review of the sales practices of 12 insurers (representing 30 home insurance brands) who sell home insurance across Australia.
The report reviews and makes findings in relation to the sale of homebuilding insurance through telephone sales (which included the review of 400 telephone sales recordings), online sales, online calculators, advertising and promotional materials, and staff training and monitoring.
Report 416 presents findings based on qualitative and quantitative research (conducted by Susan Bell Research) of consumers who inquired about or purchased home insurance during 2013.
ASIC's review also found a number of examples of potential misconduct in relation to the advertising of home insurance products.
ASIC is currently communicating with some insurers and is considering undertaking further regulatory action with other relevant insurers, in relation to these issues.
“ASIC will continue to monitor providers to ensure they are complying with their obligations to provide consumers with accurate information,” Mr Kell said.
The reports found that consumers often asked questions and sought assistance from insurers about how best to estimate the sum insured.
However, most insurers have adopted a 'no advice' or 'factual information' business model which means they are unable to provide consumers with the information and/or advice they needed.