The Australian Securities and Investments Commission (ASIC) has ordered Allianz Australia to repay customers more than A$8m ($5.39m) for mis-selling consumer credit insurance (CCI).
As part of the agreement, the German’s insurer Australian unit will refund money to more than 15,000 consumers.
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The latest order comes after ASIC’s review of the sale of CCI by lenders.
During its investigation, the Australian regulator found that Allianz mi-sold insurance plans to consumers who were not eligible to claim for unemployment or disability, and death cover.
The refund by Allianz will also include the fees charged from users who paid premiums by the month without being informed about them.
To solve the problems related to ineligible sales of unemployment and disability cover, Allianz will repay premiums and interest for active, cancelled or lapsed policies sold between 1 January 2011 and 31 December 2018.
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By GlobalDataIt will also re-evaluate all withdrawn and declined claims where the customers were ineligible for the policy at the time of sale.
Additionally, the insurer will request the customers to submit a claim in case they do not have already done so and pay claims along with interest. The company will also take a number of remedial measures.
ASIC Commissioner Sean Hughes said: “Disappointingly, our work on the sale of CCI has highlighted widespread mis-selling and poor product design. This remediation outcome is only one of many examples where CCI has failed consumers. We expect insurers to cease to sell insurance products that provide little or no value.
“We need a financial system that is fair. Insurers and other financial institutions need to rise to the challenge and embed the principle of fairness into their businesses to ensure we do not see any further instances of this kind of poor value product being pushed on to consumers.”
From 30 September, Allianz will not issue new CCI policies while will continue to carry out its obligations to existing CCI policyholders.
