One company has already overhauled its funeral insurance product and ASIC says it is planning to take action against more insurers, to help consumer awareness around this type of product.
Hollard Financial Services agreed to change the way it promotes funeral insurance after ASIC expressed concerns overs its advertising. The regulator was concerned there was insufficient information about premium increases in Hollard’s advertising which dealt with the price of the Real Insurance Expenses Cover product.
It raised concerns that some qualifications regarding price were inadequate. This included, in some cases, a lack of clarity about who minimum quoted prices applied to, and in some advertisements not including relevant information prominently enough.
ASIC, which was conducting an industry-wide review, believed there was a risk that some consumers may be misled about these matters.
Gerard Brody, CEO of Consumer Action, welcomed the action and said they had concerns about funeral insurance for years.
“We certainly share ASIC’s concerns about insufficient information about premium increases. Many people don’t realise that funeral insurance can get more and more expensive as you get older and, therefore, it often gets more and more unaffordable as well. It is tragic that someone could pay insurance for decades but, when they reach old age and their income is lower, they can no longer afford the policy and they receive no benefit after years of making payments.
“This case seems to suggest that ASIC wants clearer disclosure in the industry, but we suspect that many of the insurers will be dragged kicking and screaming to improve because, when you take the time to consider their products, the one thing that is nearly always missing is value for money,” said Brody.
HFS agreed to ensure prominent disclosure of premiums that increase with age, as well as freezing increases to premiums once a policyholder, new or existing, reaches 80.
ASIC said it is closely reviewing advertising for funeral insurance and is looking at taking regulatory action in relation to other matters. ASIC also intends to undertake a more detailed “health check” of the marketing of funeral insurance. “We want to address the problems in consumers' understanding of the product and ensure that advertising creates realistic expectations, importantly about costs and risks.”