ASIC has released a consultation paper seeking feedback on proposals to reform car add-on insurance sales and warranties sold through car dealerships.
The proposals would apply to all add-on financial products sold in connection with the purchase of a new or used car – with the exception of comprehensive car insurance and compulsory third party insurance.
The consultation paper proposes:
A deferred sales model: This will provide consumers with additional time to consider whether they need to buy add-on insurance products or warranties. The proposal is that a period of between four to thirty days must elapse before car dealership intermediaries could sell an add-on insurance product to the consumer. A different time period would apply to the sale of mechanical breakdown insurance and third party warranties sold with new cars or with used cars where the vehicle is still covered by the manufacturer’s warranty.
Enhanced supervision obligations on insurers over their car dealership sales representatives: This will introduce specific requirements for insurers to supervise and monitor their authorised representatives selling add-on insurance products.
ASIC proposes to implement any reforms developed through this consultation process by using ASIC’s existing statutory powers to modify provisions of the Corporations Act.
ASIC has also announced that it will collect data on claims ratios on add-on products (the amount paid in insurance premiums compared to the amount paid out in claims).
ASIC is also negotiating directly with individual insurers on providing refunds to consumers for past unfair conduct.