Elders Insurance repays customers following underpayment gaffe
Following consultation with the Australian Securities and Investments Commission (ASIC), Elders Insurance has repaid customers around $5.3 million as part of a program to rectify underpayments on motor vehicle insurance claims.
Elders had advised the regulator in September 2010 that it had accidentally underpaid customers over a number of years when paying total loss claims for market value insured motor vehicles.
Up until September 2010, Elders' motor vehicle insurance policy covered the cost of stamp duty on the purchase of a replacement vehicle when the insured vehicle was a total loss, ASIC stated.
The underpayments in question resulted from the failure of Elders to include stamp duty amounts (on average 3 per cent of the purchase price) when paying said claims.
Elders was first alerted to the discrepancies in payments through resolution of a matter by the Financial Ombudsman Service in August 2010, according to ASIC.
In consultation with ASIC, Elders' review and rectification program has repaid a total of $5,287,370 to 9,307 eligible customers. Elders is still working to contact around 350 former customers for whom they have no current addresses, ASIC's statement said.
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