The Australian Securities and Investments Commission (ASIC) has announced that Allianz Australia Insurance Ltd (Allianz) has agreed to refund insurance premiums relating to consumer credit insurance (CCI) sold by The Cash Store Pty Ltd (in liquidation) (TCS).
In ASIC v The Cash Store Pty Ltd (in liq) [2014] FCA 926 the Federal Court found that TCS had acted unconscionably in selling a consumer credit insurance (CCI) product. The insurance covered consumers against the risk of becoming unemployed, sick or dying.
Allianz has agreed to refund consumers $400,016 in insurance premiums.
Allianz was the insurer for the CCI product between August 2010 and March 2011. Allianz has agreed to refund these amounts to consumers, together with interest, even though it received a lesser amount from its underwriting agent at the time.
TCS’s policy was not to explain the details of the insurance to customers. The customers were told that a payment protection plan had been arranged for them. It was offered regardless of whether the customer was on centrelink benefits or were obtaining a loan for a very short period of time.
Justice Davies concluded that the policies would rarely provide effective coverage for payday borrowers who had a median term loan of 13 days.
In addition unemployed customers were ineligible for benefits for disablement or involuntary unemployment.
