A court has convicted Allianz Australia and its subsidiary and imposed criminal fines totalling $16.8 million for false or misleading statements about travel insurance.

Allianz Australia was sentenced for six counts of disseminating false or misleading information and AWP for one count on misleading information, contravening the Corporations Act.

The companies pleaded guilty to the charges, which became the subject of a case study examined by the Hayne royal commission.

The NSW Supreme Court found that between 2016 and 2018, Allianz and AWP published information online that misrepresented the characteristics or level of coverage available. In some instances, the Allianz website advertised the maximum benefits payable but failed to state the sublimits, terms, conditions or exclusions that would affect these benefits.

The matter was referred to the Commonwealth Director of Public Prosecutions after an investigation by the Australian Securities and Investments Commission.

“We pursued this case as part of ASIC’s consumer protection focus on misleading statements in the sale of insurance products,” the commission’s deputy chair, Sarah Court, said.

“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 ... it did.”

The court fined Allianz $13.5 million and AWP $3.3 million and the companies will pay ASIC’s investigation costs.

“It is important that corporations take the steps at the highest level to ensure that proper processes are in place which prevent breaches of this kind,” Justice Stephen Rothman said.

“These 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.”

Allianz previously said it reported the issues to ASIC in 2018, co-operated with the subsequent inquiry, worked with the regulator to undertake a customer remediation program, and strengthened its risk and compliance functions.

"Allianz regrets any confusion this may have caused our customers at the time. With the handing down of the court’s decision, Allianz welcomes the finalisation of this matter," a spokesperson told insuranceNEWS.com.au today. 

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