AAMI’s promotion of its Home Building Insurance ‘Complete Replacement Cover’ stated that AAMI would repair or rebuild the insured house, no matter the cost to AAMI.
ASIC was concerned that the statements gave the impression that AAMI would itself always take the necessary steps to repair or rebuild a home when a claim was made.
ASIC was concerned the statements were misleading because they did not disclose that, while AAMI could choose to arrange the repair or rebuild of the insured house, it could also choose to pay the policyholder the assessed cost of repairing or rebuilding the house, leaving the policyholder to arrange the repair or rebuild.
AAMI amended its advertising after ASIC raised its concerns.
Acting ASIC Chair Peter Kell said it is imperative for insurers to be clear with potential customers about what the insurance covers and how claims will be paid: ‘Customers decide to take out a particular type of cover based on what is advertised,’ he said.
‘While we recognise that AAMI offers a type of home building policy that can help reduce the risk of under insurance, advertising must not mislead consumers.’
As part of its review, ASIC also engaged with several consumers who had disputes with AAMI following the 2015 Wye River bushfires. AAMI has now settled all remaining claims for Wye River.
Following ASIC’s inquiries, AAMI will also revise its disclosure documents to better inform consumers about the claims process for Complete Replacement Cover, particularly when a cash settlement is provided.