Insurance giants Allianz and Suncorp will refund a combined $62.8 million in premiums to more than 100,000 customers, after selling insurance via car dealers that was of little or no use, the corporate watchdog says.
The Australian Securities and Investments Commission on Wednesday said Allianz would refund $45.6 million to 68,000 customers who bought the insurance between 2010 and last November.
ASIC also said Suncorp would refund $17.2 million to 41,228 customers who bought the insurance, which was sold under its MTA Insurance brand, which Suncorp bought in 2014.
The payouts take recent compensation payments from add-on insurance to $122 million, after ASIC also announced last month that Swann Insurance would pay out $37 million.
ASIC has repeatedly raised concerns about "add-on" insurance, claiming that in many cases insurers were paying car yard staff big commissions to selling policies that were near useless to customers.
The Allianz compensation scheme will cover a range of questionable products that ASIC said provided little or no value.
These included cover for customers who were unable to pay their car loan because of sickness, tyre and rim insurances, and guaranteed asset protection insurance (GAP), which covers a customer for losses if their car is written off and their car loan exceeds the insured value of the car.
ASIC outlined a series of concerns, including that GAP insurance customers were unlikely to make claims because of how the cover was designed, and that many customers were over-insured.
"The refunds offered by Allianz, together with those from other insurers, make up one of the largest compensation programs achieved by ASIC, with over $120 million in refunds to consumers as a result of ASIC shining a spotlight on these poor consumer outcomes," said ASIC's acting chair, Peter Kell.
Allianz acknowledged the refunds, which it said were part of a package of changes that also included improving guidance to car dealers, as well as cutting premiums for some products and the commissions paid.
"As part of an analysis of our motor vehicle add-on insurance products, we have identified some policyholders that purchased cover which may not have been suited to their circumstances and others that did not notify us to cancel their cover," Allianz said.
The Suncorp refunds also related to GAP insurance policies, which were sold to customers between 2009 and 2017. ASIC said it was unlikely customers would be able to make claims under the policies, the cover was often unnecessary, and clients were sold more expensive cover than they needed.
A Suncorp spokeswoman said it anticipated it would be contacting customers shortly, and that it had made various improvements to its products to provide "better value" for customers.
"Both Suncorp and MTAI continue to focus on delivering high-quality products that provide good value and protection for our customers," the spokeswoman said.
Consumer groups have long raised concerns about types of add-on insurance, and a senior policy officer at the Consumer Action Law centre, Susan Quinn, said there would be other people outside those identified by the insurance companies who could be eligible for a refund.
“There are groups of people who bought this insurance and should not have been sold it, but there’s lots of other people who bought this insurance through pressures sales and may still be able to get a refund,” Ms Quinn said.