Two subsidiaries of German insurance company Allianz have been fined A$16.8 million (US$10.4 million) for false or misleading statements.
The Supreme Court of NSW on Friday convicted and imposed criminal fines of $13.5 million on Allianz Australia Insurance Limited and $3.3 million on AWP Australia Pty Ltd.
The Australian Securities and Investments Commission (ASIC) said the Court found that between 2016 and 2018, Allianz and AWP published information online, including on Allianz’s domestic and international travel insurance web pages, that misrepresented the characteristics or level of coverage of its travel insurance.
Allianz Australia Insurance was sentenced for six counts of disseminating false or misleading information and AWP was sentenced for one count of disseminating misleading information, contrary to the Corporations Act.
The Allianz website advertised the maximum travel insurance benefits payable to consumers but sometimes failed to state that sub-limits, terms, conditions or exclusions would limit those benefits.
ASIC Deputy Chair Sarah Court said the ruling from Justice Stephen Rothman highlighted the critical need for the insurance industry to be transparent and accurate when selling and promoting products.
“We pursued this case as part of ASIC’s consumer protection focus on misleading statements in the sale of insurance products," the Court said in a media release.
“ASIC was concerned that thousands of customers were exposed to the risk that they might obtain insurance that they believed offered far more cover than they believed it did.”
In his judgement Justice Rothman said: “… it is important that corporations take the steps at the highest level to ensure that proper processes are in place which prevent breaches of this kind… these breaches were essentially caused by a desire not to expend the necessary monies to ensure proper oversight of that which is published by the company”.
Allianz and AWP will also pay ASIC’s investigation costs.
AWP marketed, sold and managed travel insurance products on behalf of Allianz, the insurer and underwriter, and both companies distributed travel insurance through airlines, financial institutions, credit card issuers, and travel agencies.
Allianz and AWP’s conduct was referred to ASIC for investigation after it became the subject of a case study by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
