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Allianz and subsidiary hit with $1.5 million penalty

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The Federal Court has ordered Allianz Australia and its subsidiary AWP to pay $1.5 million in penalties for mis-selling travel insurance policies through Expedia websites.

Chief Justice James Allsop made the order last week, ruling the businesses engaged in misleading and deceptive conduct to sell the products between February 2015 and September 2018.

Allianz and AWP say they welcome the finalisation of the matter, which arose from proceedings taken by the Australian Securities and Investments Commission (ASIC).

“Allianz and AWP cooperated fully with ASIC to resolve these proceedings expeditiously, including by making admissions and not contesting the penalty sought by ASIC,” they said in a statement to insuranceNEWS.com.au.

“In 2018, Allianz and AWP self-reported the matters [that are] the subject of these proceedings to ASIC.

“Allianz and AWP worked with ASIC on a remediation package and previously paid 15,965 customers an amount totalling approximately $1.14 million in remediation.”

A spokesman for Allianz confirmed the business no longer has contracts with Expedia in Australia.

AWP was ordered to pay $1.14 million and Allianz $360,000. They have also been ordered to pay ASIC’s costs.

“The court imposed the penalties after finding Allianz and AWP engaged in misleading and deceptive conduct when selling travel insurance by failing to correctly state how premiums were calculated and by allowing insurance to be sold to ineligible customers,” ASIC said.

According to ASIC, the court also found the businesses breached their financial services licence obligations by failing to prevent the sale of the products on Expedia to consumers who were ineligible to make claims under the policies.

They also failed to stop Expedia websites from misusing a quote from the Department of Foreign Affairs and Trade about the importance of purchasing travel insurance.

Consumer Action Law Centre backs the court’s ruling.

“We welcome enforcement action that holds insurers to account for engaging in misleading and deceptive selling of insurance products,” Policy Officer Tom Abourizk said.

“That a major insurer sold insurance products to people who were ineligible to claim under them for over three years is particularly shocking.”

He says the case demonstrates travel insurance is the kind of product that should not be sold using “pressure tactics”.

“It is crucial that the ban on the unsolicited selling of insurance products be interpreted to apply to travel insurance,” Mr Abourizk told insuranceNEWS.com.au.

Click here for the court ruling.