ASIC has released Report 361 Consumer credit insurance policies: consumers’ claims experiences (REP 361) based on interviews with over 50 consumers who had claimed on a CCI policy with one of 9 insurers for their credit card.

When taken out on credit cards, a CCI policy covers consumers if they cannot meet their credit card repayments because, for example, they are made redundant, or are unable to work because they had an accident or fell ill. CCI policies also typically provide cover to consumers in the event of death.

While consumers whose claims were accepted were generally pleased to receive a benefit payment that assisted them, they were not always happy with their experience, because:

• their benefit payment was less than they had expected, or
• payments were not made in a timeframe consistent with credit card repayment due dates.

According to the General Insurance Code of Practice overview for the 2011–2012 financial year 11.6% of claims made on CCI policies were denied

The research also identified the following in relation to consumers’ experiences making a claim on their CCI policy:

• most consumers did not know how to make a claim or who to contact (often they contacted the entity who sold them their policy and not the insurer);
• most consumers did not make a claim promptly
• some consumers struggled with the claim assessment process which included completing long forms and providing documented evidence (such as medical certificates)
• the longer it took for a claim to be finalised the greater the financial impact this usually had on consumers, and
• consumers had mixed experiences making a complaint about their claim.

The report contains useful case studies.

ASIC is currently conducting industry surveillance focusing on the handling of CCI claims, complaints and cancellations.

ASIC says it will take enforcement action when necessary especially where CCI has been mis-sold.