The Australian Securities and Investment Commission has ordered six car insurers to inform customers about automatic policy renewals after receiving complaints from consumers.
An ASIC review found that insurers didn’t always clearly inform new customers that policies would automatically renew unless they advised otherwise.
Some customers had taken out a new policy with a rival insurer before learning that their old policy had been automatically renewed. Others said their bank accounts had been overdrawn by unexpected direct debits.
In most cases consumers were only informed about the practice in the product disclosure statement – which was sometimes not received until after the policy was issued – and the renewal notice.
The six insurers that perform automatic annual renewals have agreed to clearly inform consumers about automatic renewal when consumers first purchase their car insurance. Insurers who have not already done so will update their telephone sales scripts, along with clearer and more prominent messaging on their websites.
ASIC deputy chair, Peter Kell, said the disclosure improvements would help protect consumers.
“Automatic renewal of insurance may be convenient for some consumers but it is important that this is an informed choice,” he said.
“Other consumers may wish to take the opportunity to shop around when their insurance is due for renewal, to ensure they are obtaining the best value cover that meets their needs.”
The six insurers at the centre of the complaints were AI (Suncorp Group), Auto & General Services, CGU Insurance (Insurance Australia Group Limited), The Hollard Insurance Company, Progressive Direct Insurance Company and Youi.