Elders Insurance has repaid customers approximately $5.3 million as part of a program to rectify underpayments on motor vehicle insurance claims.
In September 2010, Elders advised ASIC that it had inadvertently underpaid customers when paying total loss claims for market value insured motor vehicles – a problem going back over a number of years.
Up until September 2010, Elders’ motor vehicle insurance policy covered the cost of stamp duty on the purchase of a replacement vehicle of the same value where the insured vehicle was a total loss. Stamp duty varies from state to state but on average is about 3% of the purchase price. Despite this, Elders had failed to include the stamp duty amounts when paying total loss market value claims.
Elders was alerted to the underpayments through resolution of a matter by the Financial Ombudsman Service in August 2010.
In consultation with ASIC, Elders implemented a review and a rectification program to pay the outstanding amounts, including interest, to eligible customers.
To date 9,307 customers have received a total of $5,287,370 in payments. While the rectification program is nearing completion, Elders is still working to contact around 350 former customers for whom they have no current contact details.
ASIC acknowledges Elders’ cooperation in responding to this issue.
ASIC’s work with Elders in this instance will ensure that consumers can be confident they will receive the full amount they are entitled to under their vehicle insurance claim.
Consumers who received an Elders total loss settlement for a market value insured motor vehicle before September 2010 and who have not heard from Elders are encouraged to contact Elders on 1300 554 184 or firstname.lastname@example.org to determine if they are eligible for a payment.