Hundreds of Latitude Insurance customers were mis-sold consumer credit insurance (CCI) with personal loans says ASIC and will be refunded to a total of $1.1 million.
Hallmark General Insurance Company Ltd (trading as Latitude Insurance) will provide refunds of approximately $1.1 million to 905 customers after it mis-sold consumer credit insurance (CCI) with Latitude personal loans and incorrectly denied claims on CCI policies sold with Latitude and other credit cards.
CCI is a type of add-on insurance that provides some cover to meet the repayments under a consumer’s loan contract if they die, suffer a traumatic illness (such as cancer), or become disabled or unemployed.
Latitude Insurance identified and reported to ASIC that between October 2011 and June 2014, it sold involuntary unemployment insurance to personal loan customers who were ineligible to claim because they did not work the required minimum 20 hours per week.
It also identified that between May 2014 and February 2017, its new partly automated claims assessment process had incorrectly denied claims to credit card CCI customers, because it failed to properly apply the exclusion definition of ‘casual employment.’
In response, Latitude Insurance will:
- refund premiums and interest to personal loan involuntary unemployment insurance customers who were ineligible to claim. Customers also have the option to retain their policy and will not be subject to the minimum working hours condition for past or future claims.
- pay claim amounts and interest to credit card CCI customers that had incorrectly denied claims.
Acting ASIC Chair Peter Kell said customers should never be sold insurance they won’t be able to claim on and that claims processes must be robust.
‘Customers should always be confident that when they come to claim on their insurance, their claim will be properly assessed.’
Latitude Insurance will be contacting eligible customers.
