News Non-Life 25 Jan 2018

New Zealand:Group urges checks on insurance sales by car dealers

25 Jan 2018

A consumer watchdog has called for New Zealand's regulators to take a closer look at insurance products sold via car dealers in the wake of scrutiny in Australia which has forced insurers there to refund more than US$100 million to customers.

Ms Jessica Wilson, head of research at Consumer New Zealand, said people who bought cars were regularly offered insurance and warranty products which may provide very little value, reported New Zealand Herald.

"You can end up paying for cover you're already entitled to by law," she said.

Other products, such as payment protection insurance, often came with restrictive terms and conditions, which limited the consumer's ability to make a claim, she added.

"We're concerned these products continue to be sold with misleading information about the cover they offer and we'd like to see regulators take a closer look at this market."

The products include insurance for tyre and rim, warranty, loan protection and guaranteed asset protection.

However, Mr Greig Epps, industry relationship manager at the Motor Trade Association (MTA), said the Kiwi regulatory environment might mean the problems found in Australia did not exist in New Zealand or might be more difficult to occur on a wide scale.

"Recent revisions to the Consumer Credit Contracts and Finance Act (CCCFA) and changes brought in under the Responsible Lending Code mean that all finance and insurance selling must meet the customer's requirements," he said. "So selling F&I products in NZ in a way that does not meet that requirement will be 'illegal' or 'non-compliant'.”

He said: "MTA advises its vehicle trader members to be as clear as possible about these products, there is also a need for customers to have a good understanding of their own current insurance coverage and determine whether they need any further insurance or warranty products."

Mr Tim Grafton, Chief Executive of the Insurance Council of New Zealand, said: "ICNZ has not been advised by either regulators or its members of the sale of insurance that is not fit for purpose.

"ICNZ requires that its members do not bring the insurance sector into disrepute."


 

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