Junk Insurance Explained

The junk insurance scandal explained

For decades, banks around the world made enormous profits by charging their customers for junk insurance that didn’t deliver what was promised*.

While the banks charged you premiums for this junk insurance (and then charged interest on the premiums and often didn’t even disclose the fact), they rarely delivered any actual … insurance! A lot of the time, the insurance just plain wasn’t needed, or was not appropriate to what was insured. In other areas, the level of payouts was ridiculously low, generating fantastic profits for the banks, at their own customers expense.

Selling this junk insurance was incredibly profitable. For example in the UK (where sorting out the scandal is more advanced) it turns out that one of the largest high street banks was making 30% of their profits from selling junk insurance.

The banks got away with it for a long time. In Australia it took the Royal Commission into the banking industry to really highlight the wrongdoings and the widespread selling of junk insurance.

The report, and investigations by ASIC, were scathing (see some of the links at the bottom of this page). It highlighted what terrible value these junk insurance policies sold by the banks were for consumers, and how the banks were out of line in selling these products. It clearly told the banks and insurers to stop selling them.

The banks were ordered to remediate the millions of customers they had ripped off.

We don’t know how many Australians are eligible for a refund, but we suspect it’s more than 5 million people. Basically, if you’ve had a credit card, home loan, car insurance or other warranty products in the last 20 years, there is a good chance you have been sold junk insurance and are eligible for remediation from your bank or insurer.

The order, backed by legislation to remediate and pay back Australians was made in 2019. Yet here we are in 2024, and only a few hundred thousand cases have been repaid so far. The extent of the mis-selling of junk insurance is massively underappreciated and so far largely unaccounted for and unclaimed by millions of Australians.

Infographic by the Australian Securities & Investments Commission (ASIC) saying 'Consumer credit insurance (CCI) has offered poor value to customers'. For every $1 paid in premiums by customer only 11 cents was paid in claims for CCI sold with credit cards. Graphic of a man stood in the rain with a leaky umbrella.
© Australian Securities & Investments Commission. Reproduced with permission.

What’s the role of Reclaimer?

We’re here because we know how the game works. For more than a decade, we’ve operated one of the largest claims management companies in the UK, securing the equivalent of more than a billion dollars in refunds and remediation for about 200,000 people.

We know, and the big banks know… and you know… that it’s not a fair fight. Most people have got better things to do with their time than pursue a complicated claim for junk insurance that was “mis-sold” many years ago.

And even if some brave soul does open a case, the betting man might question if they’ll stick at it once it gets complex and the phone line is on hold “because there’s an unusually high volume of calls …” etc.?

Unfortunately, those that do have the sheer determination to plough on may be persuaded to settle for a carefully, legally worded token payment, a so-called “gesture of goodwill” with no admission of liability.  That’s very likely to be a fraction of what they’re really due.

Well, not Reclaimer. As we said: We know the game. We won’t settle for BS. 

Our job is to get you all the money you ever paid, plus the interest you probably hadn’t realised you had been paying for many years, plus compensatory interest.

Reclaimer does one thing, and at this one thing, we’re pretty sure we’re the best in the world … getting the banks and insurers to pay back their customers who have been mis-sold junk insurance.

With the experience of recovering over $1 billion of junk insurance under our belt already, we’re confident we’ll get back everything you’re owed. We have the systems, the know-how, the persistence and yes the incentive* to get you back what you are due.

*Why we do it - our commission

Don’t fall off your seat, but here’s the shocking thing: We do this for money.

Yes, it’s true to say that fighting the banks for customers has become a mission for us after seeing the scale of the wrongdoing … but we’re not a charity.

We want to make money, and the only way we can make money is to be the best in the world at making money for our customers. We do this by securing them the refund and remediation they are due, and taking our commission from that.

The simple truth is that the more we get back for you, the more we make.

If we don’t get any money back for you, we don’t get any money ourselves.

It costs you absolutely nothing for us to try on your behalf. If you aren’t eligible for a refund, we’ll let you know, free of charge and free of obligation. All we need is your information and your permission to proceed.

Pretty clear, isn’t it?

Of course, you can try and do it yourself or rely on your bank to let you know you’re due a refund. In other words, trust the folks who ripped you off before. Good luck with that.

ABC News logo

'Pitiful payouts' from 'junk' credit insurance sold by major banks with loans and credit cards

Australians are getting "extremely poor value for money" on their consumer credit insurance (CCI), according to the corporate regulator's frank and scathing assessment of the industry.

7NEWS logo

Up to 6 million Australians still estimated to be owed refunds for junk insurance

Anyone who has taken out a home loan, credit card or personal loan could be in line for a payout from their bank.

References from articles