Six insurers have agreed to be more upfront about annual automatic renewal processes for car insurance, after a spate of complaints led to an Australian Securities and Investments Commission (ASIC) review.

The review found consumers were not clearly informed when initially buying insurance that it would automatically renew unless they opted out.

Some consumers complained they had already bought cover from another insurer before realising their previous policy had automatically renewed.

In some cases consumers’ bank accounts were overdrawn due to unexpected direct debits.

In most cases consumers were only informed of the automatic renewal practice in product disclosure statements – which may not be received until after the insurance is purchased – and in renewal notices.

Now AAI (which incorporates the Suncorp brands), Auto & General, CGU, Hollard, Progressive Direct and Youi have agreed to tell customers about automatic renewals at point of sale.

The insurers will update their phone sales scripts and produce clearer, more prominent messaging on their websites.

ASIC says consumers may benefit from automatic renewal, because it ensures continuity of coverage.

The law allows consumers a 14-day cooling-off period for new and renewing policies.

ASIC Deputy Chairman Peter Kell says automatic renewal may suit some people, but it is important consumers have a clear choice.

“These disclosure improvements will help reduce the risk of consumers being caught by surprise by an automatic renewal,” he said.