Allianz misled its travel insurance clients for six years

Rod Myer
Sep 17, 2018, updated Sep 18, 2018

Michael Winter said Allianz didn't report its breaches to ASIC. Photo:AAP

Insurance provider Allianz kept misleading and deceptive information on its websites from July 2012 till earlier this year and clients were not told about it, the financial services royal commission has heard.

Allianz was shown up as not having acted for years despite knowing about the issue.

All up there were 120 errors on the websites relating to car, travel, boat, home and life insurance. Some were to do with incorrect legal disclosures but many related to statements about the insurance that was just plain wrong.

For example, travel insurance policies were claimed to provide unlimited cover for overseas medical treatment. In fact, the limit on such treatment was $1000. Claims the policies were available worldwide were wrong too, with exclusions for countries on a government-issued no travel list.

All up there were 29 misleading statements on travel insurance alone.

Allianz distribution chief Michael Winter told the commission in a submission that 605,000 policies had been sold through sites carrying the false information.

But counsel assisting Rowena Orr QC put it to Mr Winter that, given detail that emerged through her cross-examination, the figure was in fact over two million.

He agreed. At least 25,000 policies were made under the mis-sold policies.

When the errors came to light Allianz decided not to pull down the offending material but rather to replace it with new material over time.

“It wasn’t considered appropriate at the time. I think we were going to deal with the issues that had been identified and rectify them,” Mr Winter said.

But fixing the problem was not a priority and the process dragged on for up to two-and-a-half years, the commission heard.

In 2016, after the problem was known, the company decided not to issue a breach notice to ASIC despite the false statements breaching corporations law.

“I want to suggest to you that each of the four matters referred to … earlier all led to the conclusion that this was a significant breach that needed to be reported to ASIC,” Ms Orr said. “This was the wrong decision, wasn’t it, Mr Winter, not to report this to ASIC?”

“Yes,” he replied. But Mr Winter only made the concession over three of the four points Ms Orr made.

Allianz finally pulled the offending material down in June this year after a review by lawyers Allens revealed that not only was it carried on its own websites but on the sites of 76 partners. Those partners included airlines, travel sites and finance sites.

Once the material was pulled, Allianz acted with what up to then had been uncharacteristic speed to repost correct information.

“Now that the purchase path was offline, it was important to fix things quickly … because every day that the purchase path was offline, Allianz and [partner] AWP lost money,” Ms Orr said.

“Yes” was the response.

Ms Orr asked what the behaviour said about Allianz’s culture. “Does it take compliance seriously?”

“Yes. But we don’t see that in this series of events,” Mr Winter conceded.

“It wasn’t taken seriously enough to spend $30,000 to get a quick review done or report the issue to ASIC, or take the misleading statements down,” Ms Orr said.

Mr Winter agreed that by not acting as soon as the problems became clear the company faced issues far exceeding the $30,000 that an immediate review and remedy might have cost.

Allianz is currently working with ASIC to remediate clients damaged by its actions.