ASIC is monitoring the controversial One Big Switch domestic insurance promotion but says it is too early to say if consumers are being misled.
The News Corp-backed promotion has so far signed up more than 67,000 Australians, with a view to offering them a bulk discount on their home and contents cover.
NIBA CEO Dallas Booth says he has spoken to ASIC about concerns that consumers could be left with inferior insurance cover.
“This is a dangerous situation,” he says. “I am worried that expectations are being raised that consumers are being offered the same cover for a lower price but there is no evidence of this.
“They could pay $100 less than what they were paying previously but then if they have to make a claim for their car and find they are not covered, then that is not a good way to save money.”
Booth says one of the most concerning aspects of the promotion is the message that price is the most critical aspect of insurance.
“The risk carried by the customer, the cover available in the marketplace, the exclusions and the price all have been be taken into consideration when finding cover,” he says.
“To imply to the consumer that all insurance policies provide the same cover, and that the only thing to worry about is price, is simply not correct and goes against everything we stand for as representatives of brokers across Australia.”
An ASIC spokesman says more needs to be known of the structure of One Big Switch before they can form a view on any regulatory implications.
“It is too early to provide any public assessment at this stage,” he says.
“ASIC continues to monitor product promotions which focus on price, and price comparisons or discounts, as it is important for consumers to compare product terms to ensure they are choosing a product with features that are suitable for their needs, and not just selecting on the basis of price.
One Big Switch CEO (and former NRMA Chief Executive) David Issa was not available for comment.
by James Chalmers | Broker Buzz 02 Apr 2014