3 days ago
ASIC sues Choosi for allegedly misleading customers about insurance comparison services
The corporate regulator is suing insurance comparison provider Choosi for allegedly misleading customers through its insurance comparison services.
In proceedings filed to the Federal Court, the Australian Securities and Investments Commission (ASIC) alleges Choosi has misled Australians by claiming to compare a range of funeral and life insurers.
On its website, Choosi states: "Compare the benefits and prices of a range of products from leading insurers so you can confidently choose cover that suits your needs, budget and lifestyle."
However, ASIC claims that from the middle of July 2019, Choosi has only compared policies issued by a single insurer, except for on one occasion.
"Choosi is only comparing one insurer — Hannover Insurance — and so we're concerned that the representations to those consumers who looked at the website and heard that advertising have been misled," ASIC's deputy chair Sarah Court told The Business.
ASIC alleges that while the three funeral insurance products on Choosi's website have different branding, they are all issued by Hannover.
Similarly, despite Choosi comparing five life insurance policies with different branding, they are once again all issued by Hannover — expect for the period prior to July 2023, when Choosi included a single policy from an additional insurer.
ASIC says all policies were distributed by Greenstone Financial Services — a company associated with Choosi.
"From a consumers perspective, they've come onto a website, they're told we will compare a range of products from a number of leading insurers," says Ms Court.
Hannover is a global insurance provider with two entities in Australia — property and casualty insurance, and life and health insurance.
ASIC is alleging Hannover paid Choosi about $61 million in commissions since 2019 to solely advertise products from its company on the comparison website.
"What we're seeing here is the Choosi platform really being used by Hannover as just a platform to distribute its products, with no comparison going on with other insurers at all," says Ms Court.
She says "millions of people" would have been exposed to Choosi's messaging over the six years since this arrangement began.
"We know that this was a very widespread advertising campaign by Choosi over many years... and we know there have been thousands of policies that have been sold," says Ms Court.
ASIC alleges Choosi made the misleading representations on its website, across social media, and via television commercials and advertorials.
From July 1, 2019 until November 30, 2024, 4,225 funeral insurance policies and 9,478 life insurance policies have been sold.
Ms Court has told the ABC if the Federal Court finds Choosi has misled customers, then "it will be important for [ASIC] to seek substantial penalties".
"[It's] to send a message to Choosi, but also as importantly, to send a message to the broader industry and others that run comparison websites…
"If you want to run these kind of sites then you certainly have to be very open and transparent with consumers about what it is that you're comparing."
Ms Court says insurance comparison websites hold an important role, when they are operated and used correctly.
"We know that people are finding it difficult to afford insurance, difficult to access insurance, and so comparison websites could play a really important role in helping consumers with what is out there and helping them choose the products that are best for them."
But she warns consumers to be "wary".
"[These comparison sites] are effectively commercial businesses, they make money in certain ways.
"So with Choosi, it was from getting commissions paid to it from the one insurer whose products it was selling," she says.
While she urges consumers to do some "due diligence" by checking the policies product disclosure statements, she says the onus is on the provider to do the right thing.
"Anyone that is a commercial provider offering a comparison website, you have to be up-front with what it is you are comparing, you need to be transparent with anyone, any consumer that's coming on to use your site."
