ASIC alleges Choosi flogged Hannover life insurance products

ASIC has taken Choosi to the Federal Court for allegedly failing to provide a range of comparable options on life and funeral insurance policies to customers and instead flogging products solely from Hannover Life Re.

From at least 1 July 2019 and to this day, ASIC claims Choosi only compared policies issued by Hannover Life Re despite promising it assesses a range of options.

"In reality, the comparison service was a distribution platform for funeral and life insurance policies issued by Hannover Life Re of Australasia Ltd (Hannover), from whom Choosi received substantial sales commissions," court documents show.

The only funeral and life insurance policies that consumers could compare via Choosi's comparison service were policies issued by Hannover, ASIC added, noting the exception of one occasion when Choosi added a single policy from another insurer.

ASIC counted at least 9478 life insurance policies sold during the period, while customers bought 4225 funeral insurance policies. Choosi in return reaped $61 million in commissions.

All policies were distributed by Greenstone Financial Services, a company associated with Choosi.

Choosi allegedly made the misleading representations on its website, social media, television commercials and advertorials.

For example, on its home page, Choosi said it works "with a range of popular insurance brands, so we can make their policies available to you" and that its "free comparison service lets you compare the benefits and prices of a range of popular insurer."

ASIC deputy chair Sarah Court said the regulator is acting to stop companies taking advantage of consumers trying to shop around for the best deals.

"We allege Choosi misled thousands of consumers into thinking they were comparing options from a range of insurers. We will contend people were led to believe they were making a sensible decision by comparing policies; however, they were denied genuine choice," she said.

"Consumers may have been encouraged to buy a funeral or life insurance policy when a cheaper or more suitable policy might have been available from other insurers that were not assessed.

"Comparison websites must provide a meaningful comparison service and not simply operate as a sales channel or distribution platform for companies."

If the court finds that Choosi contravened ss 12DB and 12DF of the Australian Securities and Investments Commission Act 2001, it could pay $16.5 million for a single contravention.