Credit card travel insurance comes under spotlight

Credit cards in a row falling - credit card debt concept

The Australian Securities and Investments Commission (ASIC) has welcomed a move to improve credit card travel insurance disclosure for customers.

Following a review, credit card issuers and insurers have made improvements to disclosure for travel insurance provided through credit cards, according to ASIC.

ASIC reviewed 17 credit card brands, issued by a range of credit card issuers, including Australia’s big four banks, following complaints from customers claiming uncertainty around who was covered by the policy, the extent of exclusions and eligibility requirements.

Credit card issuers and insurers will now:

– Clarify when the insurance cover is ‘activated,’ particularly where a minimum spend threshold needs to be met to activate the insurance cover

– Clarify if and when the use of reward points to pay for travel costs will activate the insurance cover

-Clarify whether supplementary cardholders can benefit from the policy

– Provide clearer and more prominent information about the documentation needed to make a claim.

– Credit card issuers have also made improvements to their websites by making it easier to locate the insurance policy terms and conditions, and are now including direct links to the terms and conditions where none were provided previously.

According to ASIC, credit card issuers who also distribute standalone travel insurance will also make changes to their websites to “clearly distinguish the standalone travel insurance policy from the credit card policy so that consumers do not mistakenly rely on the wrong policy”.

“As travel insurance may not be at the forefront of the consumer’s mind when obtaining a credit card, improved disclosure will help consumers understand and claim,” ASIC’s deputy chairman Peter Kell, said.

“Having travel insurance is essential for those heading on an overseas trip, to provide cover for when things go wrong. Credit card issuers and insurers must clearly set out what is and what is not covered by a policy, so that consumers can work out if they are adequately covered.”

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