Millions of Australians are owed junk insurance refunds, with billions of dollars still waiting to be claimed.
Junk insurance refers to ‘add-on’ insurance policies that offer little or no real cover to policyholders. A common example is consumer credit insurance, which was often added to credit cards and loans.
Following the 2019 banking royal commission, financial institutions have been ordered to set aside $10 billion to make amends with customers.
Up to 6 million Aussies could still be owed a share of the remaining billions, according to insurance redress company Claimo.
“Many were convinced these policies were a must when taking out loans or credit in the 90s and 00s. But with billions still in the pot, it’s clear many Australians have yet to claim their due,” said Claimo CEO Nathan Mortlock.
Recent data from the Australian Financial Complaints Authority showed a surge in complaints about consumer credit insurance.
There were 951 cases brought to the ombudsman in 2022, but Claimo said there were still millions of people who hadn’t come forward.
While the amount of refunds will vary, Mortlock said some could be “significant”, with one Victorian resident claiming $90,000.
How to claim a refund
Australians are being urged to check their old credit card statements and loan agreements. Look for terms such as ‘credit card insurance’, ‘consumer credit insurance’ and ‘credit protection’.
Claimo said consumers should check for a large fee on the contract or a monthly premium being deducted from their bank or credit card statements.
They can then call their provider and ask if they’ve been sold consumer credit insurance or guaranteed asset protection (GAP), which was another common example.
