The Supreme Court of NSW has imposed a $13.5 million fine on insurer Allianz Australia after it was found to have disseminated false or misleading information associated with a number of its travel insurance policies advertised online.

Allianz Australia and fellow Allianz SE subsidiary AWP Australia pleaded guilty to all seven alleged criminal offences related to the dissemination of false or misleading information “likely to induce persons to acquire financial products”, a breach of the Corporations Act.

For its part, AWP Australia, which served as an agent for Allianz Australia and lead travel insurance product developer, was separately fined $3.3 million for a single count diseminating misleading information.

The breaches occurred between 2016 and 2018, with the Justice Rothman agreeing with the prosecutor, the Commonwealth Director of Public Prosecutions (CDPP), that the insurers had “misrepresented the characteristics or level of coverage of its travel insurance available to consumers”.

The Court found that while the Allianz website – which underwent a refresh in 2015 – advertised the maximum travel insurance benefits payable to consumers, it “sometimes failed to state that sub-limits, terms, conditions or exclusions would limit those benefits”.

These covered a range of travel insurance policies, including domestic, comprehensive travel, multi-trip travel, basic travel, and rental car excess insurance.

For instance, the CDPP identified Allianz’s use of the word “unlimited” in the description of cover for overseas emergency medical and hospital expenses, without a clear indication that sub-limits applied.

Despite external legal advice warning of the potentially false or misleading information in the draft website copy of policy descriptions – copy that was found to have been reused across Allianz’s website and policy landing pages – the insurer proceeded with its publishing, with “no legal review… conducted of the refreshed website, prior to it going live”.

An external lawyer commissioned for the draft copy review had requested between $25,000 and $30,000 to conduct reviews, which Allianz did not proceed with.

Justice Rothman noted that the breaches “were essentially caused by a desire not to expend the necessary monies to ensure proper oversight of that which is published by the company”.

In posting the inaccurate policy information, the Court found that Allianz had:

• inadequate processes for monitoring the content of its website;
• inadequate processes for monitoring and closing compliance incidents once they had been identified;
• inadequate oversight in respect of AWP;
• an insufficient appreciation of the consequences for customers of the information being on the website and Allianz’s management had not considered the matter to be a priority; and
• had not provided adequate resources to its compliance function.

Commenting on the successful litigation, ASIC deputy chair Sarah Court said the Court’s ruling “highlights the critical need for the insurance industry to be transparent and accurate when selling and promoting their products”.

“We pursued this case as part of ASIC’s consumer protection focus on misleading statements in the sale of insurance products.”

“ASIC was concerned that thousands of customers were exposed to the risk that they might obtain insurance that they believed offered far more cover than they believed it did.”

According to Court documents, Allianz sold more than 226,000 policies during this period under the various travel insurance subsets, with gross sales totalling more than $35 million apportioned between the various kinds of travel insurance offered and purchased.

In addition to the fine, Allianz and AWP has also been ordered to pay ASIC’s investigation costs.