Refund specialist Claimo says it will not accept responsibility for the failure of motor add-on group Eric, despite an administrators’ report stating it was a string of complaints and associated fees that brought down the insurer.

Eric decided to exit the market in July 2023 and stopped writing new policies last year. The company had said it was well positioned to manage the run-off, but administrators were appointed in July this year. 

The administrators’ report to creditors says directors blamed the “high volume of complaints from [fee-paid representatives] such as Claimo and Boomerang that were lodged with [the Australian Financial Complaints Authority]” in relation to add-on policies sold by Eric. 

Directors also noted “escalating AFCA fees and subscription costs” resulting from the increased number of complaints, and prolonged financial exposure.

But Claimo MD Nathan Mortlock says – while the business takes a 30% cut from any settlements – its primary focus is helping consumers who have been sold “junk” insurance.  

He says any spike in complaints was due to AFCA imposing a deadline for legacy disputes, and that he cannot comment on the complaint fees the ombudsman charges its members.

“The suggestion that Claimo is somehow the ‘bad guy’ in this picture is misplaced,” he told insuranceNEWS.com.au.

“Claimo exists to help consumers who were mis-sold insurance products, including by Eric Insurance – an insurer that has been [subject to corporate regulator] remediation for mis-selling add-on insurance.” 

He says it is “worth acknowledging the obvious elephant in the room”.

“AFCA set a deadline for lodging complaints about add-on insurance policies sold before 2019. That single decision triggered a significant spike in complaints – an increase that has likely contributed to Eric Insurance’s current challenges and decision to go into liquidation.

“Many of the Eric insurance complaints represented by Claimo have resulted in favourable AFCA decisions or negotiated outcomes for affected consumers.”

Mr Mortlock says Claimo submitted 758 AFCA complaints about Eric last financial year. 

But this is a fraction of the more than 8000 complaints Claimo submitted on all types of add-on insurance during this period, which has put the ombudsman under pressure and led to delays across its service. 

See ANALYSIS.

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