AIA to launch consumer credit policy
AIA has decided to enter the consumer credit insurance market – a market currently estimated to be worth in excess of $200 million annually.
Tuesday, February 15th 2005, 7:22AM
AIA will offer a fully compliant product covering life, terminal illness, total and temporary disablement, and involuntary redundancy at "extremely competitive" premiums.
"With burgeoning consumer debt, fuelled by black and white goods, ‘big ticket’ items such as a motor vehicles and boats there is an ever present need to protect the borrower and lender," AIA says.
With impending changes to the Credit Contracts and Consumer Finance Act – there are new strict guidelines to its sale and administration.
The amended act specifies three key obligations:
- You must not make any unreasonable requirement in relation to the terms on which a customer takes out credit-related insurance.
- You must disclose the terms of the credit-related insurance contract if you arranged the insurance.
- You must provide a proportionate rebate of any consumer credit insurance premium financed under a consumer credit contract, if the customer makes full prepayment.
AIA believes this will dissuade many smaller providers from continuing to offer and administer their own product, rather they will move toward a fully underwritten and supported product – such as one offered by AIA.
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