The Australian Financial Complaints Authority (AFCA) says it is still seeing a large number of cases where consumers, particularly from Indigenous communities, believe they have been duped into buying funeral insurance. ceremony.
Of the 260 funeral insurance cases received in the past 15 months, more than half of the claimants identified themselves as Aboriginal and/or Torres Strait Islander people, Chief Inspector and Chief Executive David Locke said. know.
He said the AFCA had awarded $700,000 in refunds and compensation in disputes over funeral plans.
Aboriginal Policy Officer Samantha Rudolph of the Consumer Action Law Center said the $700,000 paid in the decision “shows the need for better reform and harsher penalties for products and companies.” ty” mis-sold funeral insurance.
“Trust is very important to the community,” she told insuranceNEWS.com.au. “It’s about the government getting that trust.
“In a way, it’s another step towards reconciliation, about recognizing that this product has had a negative impact on some in the community and making sure everyone is addressed properly. “
Mis-selling of funeral insurance products that yield little or no value was highlighted in the Hayne royal commission in 2018.
As part of reforms recommended by the committee, funeral expense policies are no longer exempt from becoming a financial product under the Corporations Act.
Suppliers, distributors and advisors without an Australian Financial Services (AFS) license are now required to obtain a license prior to issuing a funeral veil product, while existing licensees are required to comply. comply with additional obligations.
In data released last week, the AFCA said it received 169 cases of funeral insurance in the last financial year, the fourth most disputed product for the period.
Income protection topped the list of life insurance claims by product, above 575, followed by term life (290) and total and permanent disability (184). Rounding out the top 5 list is trauma, with 115 complaints.
The AFA received 1623 life insurance claims overall in 2020/21 and 32% of these were resolved at the application and referral stages.
The most common problems with life insurance claims are incorrect premiums (213) and claim denials (212). This was followed by delays in complaint handling (172), service quality (141) and misleading product/service information (109).
The AFCA says claims of incorrect premiums are often about laddered premium rates that increase over time.
“These complaints are often exacerbated by financial firms not clearly explaining how step-by-step premium curves will affect future premium rates,” the AFCA said. .
“AFCA encourages companies to provide clear and effective premium rate tables, or premium projections, to consumers at the point of sale or during grace periods to help reduce the number of disputes about insurance fees.”
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