ASIC has released two reports relating to the sale of home building insurance.
The two reports are:
•Report 415 Review of the sale of home insurance (REP 415), and
•Report 416 Insuring your home: Consumers’ experiences buying home insurance (REP 416).
Separately, the Minister for Finance has announced that ASIC will establish a comparison website by March 2015 to help consumers to compare home building and home contents insurance products. The site will enable consumers to compare the performance of insurers on price, product features and claims handling complaints.
In REP 415 ASIC reviews the sales practices of 12 insurers (representing 30 home insurance brands) who sell home insurance across Australia. The report reviews and makes findings in relation to the sale of home building insurance through telephone sales (which included the review of 400 telephone sales call recordings), online sales, online calculators, advertising and promotional materials, and staff training and monitoring.
The purpose of ASIC’s review was to understand the information that consumers are currently receiving about home insurance at the point of sale and to encourage insurers to adopt practices that reduce the risk of consumers buying insurance that does not meet their needs including underinsuring.
At a high level, ASIC found that online and telephone sales processes are generally designed around insurers’ need to understand certain risk or underwriting criteria about consumers so that they can sell home insurance quickly and efficiently to a consumer, rather than as a way to improve a consumer’s understanding of the home insurance they are inquiring about or purchasing. Instead, this is seen as the role of the PDS and other important policy documents, such as the certificate of insurance.
The report highlights good practices ASIC identified in its review.
ASIC’s review also found a number of examples of potential misconduct in relation to the advertising of home insurance products. ASIC is currently communicating with some insurers and is considering undertaking further regulatory action with other relevant insurers, in relation to these issues.
Report 416 presents findings by Susan Bell Research based on qualitative and quantitative research of consumers who inquired about or purchased home insurance during 2013.
The specific issues explored in the research were:
(a) how much consumers knew about home insurance;
(b) why consumers enquired about home insurance policies;
(c) how consumers selected insurers to contact;
(d) consumers’ experiences with the inquiry and sales channels;
(e) how consumers decided the value of their building and contents; and
(f) what measures, beyond disclosure, would help consumers.
