The Australian Securities and Investments Commission says it is still concerned that consumers are being misled by funeral insurance advertising, despite the efforts of a number of direct insurers to update their funeral product offers.
The regulator said it was continuing to engage with funeral insurance providers as part of its focus on the industry, particularly in relation to the advertising of products.
The focus follows the release of research by the regulator in July 2012, which revealed that consumers rarely read the fine print contained within policy documents (see: Consumer Uncertainty Over Funeral Insurance).
According to the research, consumers considered all funeral insurance products to be the same. ‘It is therefore unlikely that they (consumers) will educate themselves about long-term costs, without prompting to do so and without assistance to do so,’ the report stated.
ASIC subsequently began talks with a number of direct insurance providers, including TAL (which issues InsuranceLine products) and Real Insurance, about the way products were designed and advertised. Both TAL and Real Insurance made changes to their funeral products and advertising in response to ASIC’s concerns (see: InsuranceLine Throws Down Gauntlet on Funeral Insurance and Real Insurance Acts on ASIC Concerns).
In spite of this action, a number of consumer groups banded together in September 2013 to call for further reforms (see: Consumer Groups Tackle Funeral Insurance Rip-Off).
ASIC generally considers there are features of funeral insurance that can be particularly difficult for consumers to understand
In the latest statement issued by ASIC, the regulator said it was important that funeral insurance ads created realistic consumer expectations, in particular about the cost of the product.
ASIC Deputy Chairman, Peter Kell, said: “ASIC generally considers there are features of funeral insurance that can be particularly difficult for consumers to understand such as increasing premiums and that premium payments can exceed the actual benefit to be paid out under the policy.”
“Designing funeral insurance policies with these types of consumer risks in mind is not only likely to provide significant benefits to consumers but also likely to result in clearer advertising messages.
“ASIC will continue its focus on funeral insurance and take steps to ensure that consumers understand funeral insurance products,” he added.
The Association of Financial Advisers recently highlighted its own concerns about the direct insurance market to riskinfo. Click here to read more.
