29/09/2018
Last Thursday Suncorp had to answer questions about Home Insurance, it is worth having a read below as the same tactics are used in car insurance. This is another example of how insurance companies take us for a ride.........
http://www.abc.net.au/…/banking-royal-commission-i…/10285082
(The webpage above has been summarised.)
Suncorp CEO of Insurance Gary Dransfield admitted AAMI received $426 million in replacement cover policies last year but were fined by ASIC for false and misleading advertising with a cost of $43,200.
The commission heard that AAMI complete replacement cover policies generated $426 million in revenue last year. The penalties were therefore 0.001 per cent of premiums collected.
In a radio advertising campaign from November 2016, which matched claims made in print advertising, AAMI said:"We'll repair or rebuild your house no matter the cost."
The policy gave AAMI the complete discretion as to whether to give a cash settlement or to manage the rebuild itself.
AAMI then insisted on cash settling claims instead of doing rebuilds. (the same as with car insurance)
The commission heard that another criticism from Ms Henderson was that AAMI was widely underestimating the cost of rebuilds when offering cash settlements to home owners. (the same as with car insurance where recommended repairers use Audatex and a rate of $54.00)
AAMI was getting a building assessment and then two quotes from builders and pricing the settlement offer on the lowest quote. (the same as with car insurance, where it is hard to get a supplement if a Recommended Repairer has submitted a Audatex quote)
Ms Orr puts to Mr Dransfield that AAI's costs would likely be lower than an individual's costs to repair and rebuild, but Mr Dransfield disagrees that this is always the case.
Orr: "But AAI receives volume and other discounts ... does it not?"
Dransfield: "Yes, generally."
The commission heard that three individuals obtained their own quotes for rebuilding, and in each case those quotes were considerably higher than the cash settlement offered by AAMI.
In one case, $783,000 was offered, and the customer-obtained quote was $833,000.
In a second case, the settlement offer was $499,000, the customer-obtained quote $659,000, and AAMI's higher second builder quote (not initially revealed to the customer) was $862,000.
In another case, settlement offered of $677,000, customer-obtained quotes ranged from $973,000 to $1.1 million.
The Home claims take a long time to be paid and by cash settling they avoid having to give a Lifetime Guarantee. (the same as with car insurance) Courtesy of BT Ryan
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