Allegations that Youi staff in Australia used unscrupulous sales tactics have triggered industry concerns about the severity of the issue and its wider ramifications for other insurers.

“The insurance industry is all about trust,” LMI Group MD Allan Manning told insuranceNEWS.com.au.

“The thing that frightens me the most is, if this is true, it is damaging the brand ‘insurance’. If people lose faith in that… they buy less of it and we as an industry suffer.”

The Melbourne-based Consumer Action Law Centre is similarly worried.

“The extent of this is unknown but it does seem to be quite widespread,” Senior Policy Officer Susan Quinn told insuranceNEWS.com.au.

“We have been aware of consumer issues or problems with Youi in the past.

“Youi being charged in New Zealand for what looks like very similar conduct raises the question of whether this is a systemic issue.

“When similar practices are happening across borders… there are big questions to be answered. It is unsettling for people who deal with insurers.”

Youi has said it will plead guilty to the 15 misconduct charges filed by New Zealand’s Commerce Commission, but denies any wrongdoing in its Australian arm.

The insurer has rejected Fairfax Media’s whistleblower accounts of clients being billed for products they never took out and staff manipulating customer data to reject claims.

The Australian Securities and Investments Commission last week told insuranceNEWS.com.au it is “making enquiries” into the matter.

It did not respond to a follow-up query on whether progress has been made.

Youi has not issued further statements beyond its initial response.

“Youi provides regular updates to its regulators and will assist with any enquiries they may have,” a spokesman told insuranceNEWS.com.au.

The insurer, regarded as a major challenger to established insurers in the direct sales space, is owned by South Africa’s Outsurance Holdings. It started selling cover direct to consumers in Australia in 2008 and expanded to New Zealand in 2014.