Allianz Australia Insurance and related party AWP Australia, have been ordered to pay penalties of $1.5 million for the misleading sale of travel insurance on Expedia-owned websites.
The Federal Court of Australia imposed the penalties after finding Allianz and AWP engaged in misleading and deceptive conduct when selling travel insurance by failing to correctly state how premiums were calculated and by allowing insurance to be sold to ineligible customers.
The Court also found Allianz failed to correctly disclose how premiums were calculated in product disclosure statements so that consumers were not given accurate information on the travel insurance they were purchasing.
Furthermore, Allianz and AWP failed to prevent the sale of insurance on Expedia websites to consumers who were ineligible to make claims under the policies, and failed to prevent the websites from misusing a quote from the Department of Foreign Affairs and Trade about the importance of purchasing travel insurance.
The case was brought before the Court in September last year by the Australian Securities & Investments Commission (ASIC).
Sarah Court, deputy chair of ASIC, said: “The community expects that the insurance industry will promote and sell products in a transparent way. 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. ASIC remains committed to ensuring that consumers’ experience matches that.”
In his decision, Chief Justice Allsop said the proposed penalties “fall within the appropriate range to deter Allianz and AWP from engaging in similar conduct in the future, and to deter the sector more generally from adopting a lax attitude towards compliance”.
The Court acknowledged Allianz and AWP’s efforts to make early admissions of liability and took this, and other relevant considerations, into account in determining penalty.
AWP was ordered to pay $1.14 million and Allianz $360,000. Both parties have also been ordered to pay ASIC’s court costs.
In a statement to Travel Weekly, a spokesperson for Allianz and AWP said both parties “cooperated fully with ASIC to resolve these proceedings expeditiously, including by making admissions and not contesting the penalty sought by ASIC”.
“In 2018, Allianz and AWP self-reported the matters the subject of these proceedings to ASIC. Allianz and AWP worked with ASIC on a remediation package and previously paid 15,965 customers an amount totalling approximately $1,140,000 in remediation,” the statement read.
“Allianz and AWP welcome the finalisation of this matter.”
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