Insurance companies were issued a strong warning after the Federal Court fined the German-based global giant Allianz $1.5 million at the end of 2021 for misleading conduct in the sale of travel insurance.
Allianz Australia and its related company, AWP Australia, were found to have engaged in misleading and deceptive conduct in promoting their travel insurance between February 2015 and September 2018.
Court finds Allianz sold insurance to consumers who were ineligible to claim
The case was brought by the Australian Securities and Investments Commission, charging Allianz and AWP with breaching financial services licence obligations.
Alliance and AWP were found to have failed to state correctly how premiums were calculated in product disclosure statements, which left customers without accurate information on the travel insurance they were buying.
Allianz was also found to have failed to prevent the sale on Expedia websites of insurance to people who were ineligible to make claims under the policies. The judge found the companies had breached provisions in section 912A and section 1041h of the Corporations Act 2001 and section 12DA in the Australian Securities and Investments Commission Act 2001.
Travel insurance should protect, not mislead consumers
On top of the $1.5 million fine, the insurance companies also had to pay the legal costs of ASIC.
In a media release issued by ASIC in September 2021, ASIC's deputy chair, Sarah Court, said people take out travel insurance for peace of mind and to protect their families.
"The value of an insurance policy is in the promise - that a consumer can feel confident and secure that they will be looked after if something goes wrong," Ms Court said. (See 21-234MR Allianz Australian Insurance and AWP Australia ordered to pay penalties of $1.5 million for misleading sale of travel insurance on Expedia websites.)
Beware of complimentary credit card travel insurance
Some travel insurance won't cover you if you step outside the parameters of the trip you are insured for. This was the case for a man who had received complimentary travel insurance through his credit card company, after using his card to pay for a cruise to New Zealand.
Tragically, he died in the 2019 Whakaari volcano explosion. The insurer rejected a loss of life claim from his family because he was killed while walking on the volcanic island, not while he was on board or being transported to or from the cruise ship.
Had he been in a vehicle on the island taking him back to a boat, or on a boat taking him back to the cruise ship, the insurance would have covered him. (See Family's loss of life claim for White Island volcano victim rejected by insurer for American Express on technicality, ABC News, August 2021.)
Why you need to know exactly what your travel insurance policy covers
This case demonstrates why you need to check whether your travel insurance covers you for all activities you undertake while travelling. This can include walking around active volcanos, through to adventure sports such as jet skiing, horse riding, parachuting or bungee jumping.
Tony Mitchell
Insurance claims
Stacks Law Firm
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