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High Court fines insurer $3.57 million for misleading customers...
The High Court has fined an insurance company $3.57 million after they mislead and overcharged 52,000 of their customers.
Since 2012 the insurance company has been increasing the amount of life insurance cover that policyholders have, by more than the rate of inflation. This meant that the company was earning higher profits than justified under their policies.
The company has a policy called “indexation”, which means that the insurer can increase cover as the rate of inflation rose. The policy aims to ensure that the value of insurance claims are level with inflation. This policy also increases the level of premiums that customers have to pay.
Evidence provided to the Court showed that the company had made a conscious decision to increase cover more than the rate of inflation.
One customer paid $33,000 in extra premiums over six years. The company’s practice meant that, all up, customers had paid an extra $13.5 million in premiums.
The Court decided that customers must make an informed decision to increase the cover of their insurance policy and that was not a decision that the company could make on their behalf. The company also needed to inform customers the basis for the increase in cover before implementing it.
The company has paid back $10.8 million to policyholders, while some customers chose to keep the increased cover. The Court fined the company a further $3.57 million for their breaches.
It is important to be aware of what your insurance policy covers. If you are confused about your insurance policy, it pays to seek advice from a professional with experience in the area.
Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are. At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.
Alan Knowsley and Hunter Flanagan-Connors