Lumley exits home warranty insurance
Lumley General has announced plans to exit the home warranty insurance market, citing unsatisfactory returns from the controversial product.
The company stopped taking new applications on July 1 but will continue to offer renewal for existing customers until October 31. It will cease issuing home warranty policies altogether from January 1.
CEO Vivek Bhatia says Lumley will cover all policyholders as at December 31 for the duration of their policy. “We will maintain a claims-handling service to manage any claims that may arise in future years.”
Home warranty cover makes up less than 2% of Lumley’s total insurance premium income.
Privatised home warranty insurance has come under fire in recent months after a General Insurance Code of Practice review by the Financial Ombudsman Service found 45% of home builders’ warranty claims were rejected in the year to June 30 2008, against just 2% across all lines of insurance.
Financial Services Minister Chris Bowen last month instigated a review of the product, citing policy “under-performance” compared to other insurance lines.
A Lumley spokesman denied suggestions that criticism of the product from consumer and building advocates influenced the decision to drop it.
“Micro-factors such as comments made by individuals were not a factor,” he told insuranceNEWS.com.au.
The company stopped taking new applications on July 1 but will continue to offer renewal for existing customers until October 31. It will cease issuing home warranty policies altogether from January 1.
CEO Vivek Bhatia says Lumley will cover all policyholders as at December 31 for the duration of their policy. “We will maintain a claims-handling service to manage any claims that may arise in future years.”
Home warranty cover makes up less than 2% of Lumley’s total insurance premium income.
Privatised home warranty insurance has come under fire in recent months after a General Insurance Code of Practice review by the Financial Ombudsman Service found 45% of home builders’ warranty claims were rejected in the year to June 30 2008, against just 2% across all lines of insurance.
Financial Services Minister Chris Bowen last month instigated a review of the product, citing policy “under-performance” compared to other insurance lines.
A Lumley spokesman denied suggestions that criticism of the product from consumer and building advocates influenced the decision to drop it.
“Micro-factors such as comments made by individuals were not a factor,” he told insuranceNEWS.com.au.