10.3 What the case study showed

The case study raised a number of distinct issues about AAI’s marketing of the CRC policies and the operation of those policies in the context of the Wye River bushfires.

10.3.1 Misconduct

I consider that by representing in its CRC advertising materials that AAMI would repair or rebuild an insured’s house, no matter the cost, AAI may have engaged in conduct that was misleading or deceptive in contravention of section 12DA of the ASIC Act, or may have made false or misleading representations in contravention of section 12DB(1)(e) of that Act. Mr Dransfield accepted that:

  • it was not correct that AAI would necessarily repair or rebuild homes covered by the CRC product, because AAI could choose to provide a cash settlement instead;[1] and
  • it was not correct that AAI would repair or rebuild,no matter the costto AAI: that proposition was subject to at least two relevant (and significant) qualifications.[2]

In its submissions, AAI strongly resisted such a finding.[3]

In respect of therepair or rebuildrepresentation, AAI submitted that its advertising was not misleading or deceptive because:

  • the possibility that claims would be cash settled would have been apparent from the PDS;[4]
  • if customers insisted on AAI managing a rebuild, AAI would do so;[5] and
  • many policyholders prefer their claims to be resolved through a cash settlement.[6]

Taken together, AAI said that there couldhave been no real doubt in the market that a cash settlement was a possibility under a CRC policy.[7] For my part, I am not so sure of this. The clear and repeated message of AAI’s advertising, as accepted by Mr Dransfield, was that AAI wouldrepair or rebuild.[8] That advertising material generally only contained a high-level warning to read the PDS it did not specifically draw the audience’s attention to the fact that the PDS contained material qualifications to the representation.[9] In my view, it is not reasonable to expect that persons hearing or seeing AAI’s advertising material would seek out the PDS to understand whether AAI’s central representation was subject to some qualification.

In respect of theno matter the costrepresentation, the central thrust of AAI’s submissions appears to be that the representationwould be interpreted to mean that there was no cap by way of asum insuredon the repair or rebuild funds.[10] In my view, that is not how the representation would have been understood by a reasonable person. Rather, a reasonable person would have likely understood the representation as conveying that AAI would cover the costs ofrepair[ing] or rebuild[ing]a property so as to restore it to itsprevious state.[11] This would carry with it some natural limitations on the costs that AAI could be expected to bear AAI would not be expected tocarry out whatever new and improved building might be desiredby a policyholder[12] but it would not have conveyed that AAI would only be liable for what it would cost AAI to rebuild or repair. Accordingly, I consider that AAI may have also engaged in conduct that was misleading or deceptive, or have made false or misleading representations, in this respect.

The matter having been drawn to ASIC’s attention, it is for ASIC to determine what further action it can and should take.

10.3.2 Conduct falling below community standards and expectations

I consider that AAI’s conduct fell below community standards and expectations in three respects.

First, as Mr Dransfield acknowledged, and as AAI accepted in its written submissions,[13] AAI could have done more to keep policyholders affected by the Wye River bushfires informed as to the progress of their claims,[14] and could have better explained the delays that it was facing when trying to complete the scope of works.[15]

Second, AAI sent home and contents policy renewal letters to policyholders whose properties had been destroyed by the Wye River bushfires.[16] As a result, those policyholders were charged premiums for policies relating to properties that were destroyed or were no longer habitable.[17] As acknowledged by Mr Dransfield, and by AAI in its written submissions, AAI should not have charged premiums on renewed home and/or contents policies for customers whose homes had been destroyed in the Wye River bushfires.[18]

Third, despite ASIC drawing AAI’s attention to similarities between the messaging of advertising materials that it was investigating and advertising materials that AAI was proposing to launch, AAI nonetheless proceeded to launch an advertising campaign featuring those materials in early March 2017.[19] In its submissions, AAI contended that its conduct did not fall below community standards and expectations, because ASIC had not yet reached a conclusion on the material, and AAIgenuinely believed that the proposed advertising campaign satisfactorily and appropriately conveyed the way in which the CRC product worked.[20] I do not consider that this submission sits comfortably with the concession made by Mr Dransfield that AAI launched its new campaign because thebusiness imperative [to grow the home insurance portfolio] trumped any desire to ensure that [AAI’s] marketing materials were not misleading to customers.[21] This was conduct that fell below community standards and expectations.

10.3.3 Causes of the conduct

I consider that one cause of the conduct of AAI in relation to its advertising material was an internal culture that favoured growing the business over legal and regulatory compliance. While AAI strongly resisted such a characterisation in its submissions,[22] Mr Dransfield’s evidence was that the business imperative to grow the home insurance portfolio at AAI trumped the desire to ensure the marketing material was not misleading to customers.[23]


[1]Transcript, Gary Dransfield, 20 September 2018, 6307.

[2]Transcript, Gary Dransfield, 20 September 2018, 6307.

[3]AAI Ltd, Module 6 Case Study Submission, 46 [15]–[22].

[4]AAI Ltd, Module 6 Case Study Submission, 5 [18].

[5]AAI Ltd, Module 6 Case Study Submission, 5 [19].

[6]AAI Ltd, Module 6 Case Study Submission, 56 [20].

[7]AAI Ltd, Module 6 Case Study Submission, 6 [21].

[8]Transcript, Gary Dransfield, 20 September 2018, 6306.

[9]See, eg, Exhibit 6.369, Witness statement of Gary Dransfield, 24 June 2018, 44 [127]; Exhibit GCD-4 (Tab 9) [SUN.0760.0302.0540], (Tab 58) [SUN.0760.0302.0656], (Tab 58) [SUN.0760.0302.0660].

[10]AAI Ltd, Module 6 Case Study Submission, 6 [22].

[11]Cf AAI Ltd, Module 6 Case Study Submission, 6 [22].

[12]Cf AAI Ltd, Module 6 Case Study Submission, 6 [22].

[13]AAI Ltd, Module 6 Case Study Submission, 7 [23].

[14]Transcript, Gary Dransfield, 20 September 2018, 62867.

[15]Transcript, Gary Dransfield, 20 September 2018, 62867.

[16]Transcript, Gary Dransfield, 20 September 2018, 6299.

[17]Transcript, Gary Dransfield, 20 September 2018, 6299.

[18]AAI Ltd, Module 6 Case Study Submission, 7 [24]; Transcript, Gary Dransfield, 20 September 2018, 6299.

[19]Transcript, Gary Dransfield, 20 September 2018, 6315; Exhibit 6.369, Witness statement of Gary Dransfield, 24 June 2018, 40 [110].

[20]AAI Ltd, Module 6 Case Study Submission, 10 [27].

[21]Transcript, Gary Dransfield, 20 September 2018, 6316.

[22]AAI Ltd, Module 6 Case Study Submission, 1213 [33]–[35].

[23]Transcript, Gary Dransfield, 20 September 2018, 6316.

102 thoughts on “10.3 What the case study showed”

  1. Pingback: dapoxetine online
  2. Pingback: stromectol 300 mg
  3. Pingback: stromectol dosing
  4. Pingback: buy stromectol
  5. Pingback: ivermectin usa
  6. Pingback: cialis tablets
  7. Pingback: tadalafil capsules
  8. Pingback: ivermectin 2%
  9. Pingback: tadalafil cialis
  10. Pingback: get cialis
  11. Pingback: research tadalafil
  12. Pingback: ivermectin 3
  13. Pingback: viagra bestellen
  14. Pingback: cialis coupon
  15. Pingback: viagra connect
  16. Pingback: viagra for men
  17. Pingback: tadalafil mexico
  18. Pingback: generic
  19. Pingback: buy ivermectin nz
  20. Pingback: ivermectin 1 cream
  21. Pingback: buying ivermectin
  22. Pingback: ivermectin 2
  23. Pingback: ivermectin buy nz
  24. Pingback: confeitofilm

Feedback