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Who is selling junk insurance?

Insurance products called "harmful", "worthless" and "extremely poor value for money" by Australian regulators are being sold in New Zealand according to this report by Nikki Mandow, posted on Newsroom. Mostly, these are policies are general insurance offered by finance companies, and a few banks, on credit card and vehicle finance debt. Although the article also mentions home loans, most bank cover for homeloans is much better than this - I know, we research the mortgage cover a lot. None of that would fall into the low claims rates and high claim disputes of the junk insurance examples given in the article. 

A recent report by ASIC states that some of the consumer credit insurance policies are more likely to harm consumers than protect them. In the UK customers received substantial compensation after investigations into protection insurance sold. ASIC is likely to take action to recover more than A$100 million back for customers for the same reason. Click here to read more. 

My piece on goodreturns which covers this can be found here: link

Why is this interesting? I think it draws consumer attention to the discussion about quality of cover. That is a useful shift for two reasons. The value of financial risk transfer is something that I take for granted - not everyone does - so I like that. The value of any given policy, if its a battle about how good that is, or how suitable that is, is a great conversation to have with a client, and likely to lead to them choosing better cover, and to improve the industry over time. 

 

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