7.2.1Mr Winter’s evidence
Allianz distributes travel insurance through a number of channels, including its own website,[1] and through an underwriting agency, AWP Australia Pty Ltd (AWP).[2] AWP also distributes travel insurance products issued by Allianz through a number of channels, including through its website, and through the websites of third parties, such as airlines or travel businesses, which Allianz refers to as ‘partners’.[3]
Allianz is responsible for determining the travel insurance content on its own website, and for checking that the travel insurance content of its own website, and the websites of AWP and AWP’s partners, comply with the law.[4] Allianz is also responsible for checking that the content of the ‘purchase paths’ used by customers who buy Allianz travel insurance products from those websites comply with the law.[5]
In 2015, Allianz decided to update the ‘look and feel’ of its website.[6] At that time, Allianz had a process for approving new website content called the Document Compliance Sign-Off (DCSO) process.[7] That process was used to review the new content that was added to the website, but was not used to review the updated website as a whole before it was made accessible to the public on 10 December 2015.[8] Mr Winter described this as a ‘failure in the approach’.[9]
Shortly before the updated website was made accessible to the public, an Allianz corporate solicitor identified issues with the updated website, including an absence of certain legally required disclaimers.[10] Despite this, the website was launched. Over the coming weeks, the solicitor identified further issues with the content on the website, including misleading and deceptive statements.[11] Despite these issues, Allianz did not take down any part of the website.[12]
In January 2016, Allianz decided to undertake a review of the website content.[13] The corporate solicitor put together a proposal for an external law firm to review the website content by mid-February 2016, at a cost of $25,000 to $30,000.[14] Mr Winter declined to approve this expense.[15] As a result, the corporate solicitor spent two days a week working on the matter until the review was done.[16] Mr Winter conceded that his decision not to approve this expense was not the right decision, and conceded that this was reflective of a lack of prioritisation within Allianz of fixing the issue.[17]
The review ultimately took about 10 months to complete.[18] Because of the limited resources available, the corporate solicitor prioritised the review of the home, motor, life and business insurance content.[19]
By April 2016, the review had identified a number of misleading and deceptive statements in relation to the home, motor, life and boat insurance pages of the website. These included 14 such statements in relation to home insurance, four in relation to car insurance, three in relation to life insurance, and one in relation to boat insurance.[20] Mr Winter accepted that these statements may have misled consumers, and were contrary to financial services laws.[21]
In May 2016, Allianz decided not to report the incorrect and misleading content to ASIC.[22] Mr Winter was present at the meeting of the committee that made that decision, but could not recall whether the committee considered the number or frequency of similar previous breaches, as required by section 912D of the Corporations Act.[23] He conceded that the decision not to report the matter to ASIC was the wrong decision.[24] He also conceded that there were ‘clear problems known to the committee at the time of this meeting with the way the DCSO process was operating and being applied within Allianz’.[25]
It took until November 2016 for Allianz to complete the review of the travel insurance content and prepare an issues list and proposed rectification plan.[26] Mr Winter told the Commission that the review took so long because Allianz had failed to allocate the appropriate resources and priority to the issue.[27] The issues list identified numerous misleading and deceptive statements about travel insurance products on Allianz’s website.[28] Having compiled the issues list, Allianz provided it to AWP for review.[29] Mr Winter conceded that this was an unnecessary step, and told the Commission that Allianz could have just fixed the issues itself.[30]
AWP did not return the issues list to Allianz with its comments until May 2018, about 18 months after Allianz had provided it to AWP.[31] Mr Winter said that the issues list had been the topic of discussion at 14 meetings between Allianz and AWP between July 2017 and May 2018 and conceded that Allianz had been aware of the failure to rectify these issues.[32] He accepted that Allianz had not treated the matter as urgent.[33]
Between December 2015 and May 2018, the misleading and deceptive statements identified in the issues list remained on the website.[34] During that period, Allianz did not report the matter to ASIC, or even consider taking down the relevant parts of the website.[35] Mr Winter conceded that neither Allianz nor AWP acted with any sense of urgency to fix the issue, or appreciated the seriousness of the issue, and that, every day the website was accessible to the public, Allianz was contravening financial services laws.[36] Mr Winter accepted that, in this instance, it was more important to Allianz to protect the bottom line than to stop misleading its customers.[37]
The Commission heard that, in May 2018, given the amount of time that had passed, Allianz decided to engage an external law firm to conduct another review of the web pages and purchase paths. That review identified 39 incorrect or misleading statements on the travel insurance pages of the website, and found that many of these statements had been on the website since 2012.[38]
In June 2018, Allianz reported the matter to ASIC.[39] On 12 June 2018, Allianz told ASIC that the misleading and deceptive content had been on the website since December 2015.[40] Although Allianz found out on 21 June 2018 that some of the misleading and deceptive statements had been on the website since July 2012,[41] it did not tell ASIC this until 7 September 2018, and that was in response to a compulsory notice issued by ASIC.[42]
Allianz took down the travel insurance pages of its website on 6 June 2018, and disabled the direct purchase path on 12 June 2018.[43] Although Allianz was aware by 14 June 2018 that there was also misleading and deceptive content in the purchase path for its partner websites, Mr Winter decided not to take down the purchase paths for those websites.[44]
During the period from December 2015 to June 2018, Allianz issued more than two million travel insurance policies.[45] Mr Winter was not able to say how many Allianz customers were affected by the misleading and deceptive content on Allianz’s website.[46]
7.2.2Ms Callahan’s evidence
Ms Callahan gave evidence about issues relating to Allianz’s compliance processes, governance and culture – both in connection with the misleading and deceptive content on the website, and more generally. Ms Callahan’s evidence is dealt with in more detail below.
[1] Transcript, Michael Winter, 17 September 2018, 5912.
[2] Transcript, Michael Winter, 17 September 2018, 5913.
[3] Transcript, Michael Winter, 17 September 2018, 5915.
[4] Transcript, Michael Winter, 17 September 2018, 5916.
[5] Transcript, Michael Winter, 17 September 2018, 5916.
[6] Transcript, Michael Winter, 17 September 2018, 5917.
[7] Transcript, Michael Winter, 17 September 2018, 5917.
[8] Transcript, Michael Winter, 17 September 2018, 5917.
[9] Transcript, Michael Winter, 17 September 2018, 5917.
[10] Transcript, Michael Winter, 17 September 2018, 5918–9.
[11] Transcript, Michael Winter, 17 September 2018, 5922–5.
[12] Transcript, Michael Winter, 17 September 2018, 5926.
[13] Transcript, Michael Winter, 17 September 2018, 5926.
[14] Transcript, Michael Winter, 17 September 2018, 5941–2; Exhibit 6.270, 5 February 2016, Emails of 5 February 2016 Concerning Allianz Website Review Scope of Review and Cost Estimates, 3–4.
[15] Transcript, Michael Winter, 17 September 2018, 5943.
[16] Transcript, Michael Winter, 17 September 2018, 5943.
[17] Transcript, Michael Winter, 17 September 2018, 5943–4.
[18] Transcript, Michael Winter, 17 September 2018, 5944.
[19] Transcript, Michael Winter, 17 September 2018, 5943.
[20] Transcript, Michael Winter, 17 September 2018, 5926–7.
[21] Transcript, Michael Winter, 17 September 2018, 5928.
[22] Transcript, Michael Winter, 17 September 2018, 5929.
[23] Transcript, Michael Winter, 17 September 2018, 5939.
[24] Transcript, Michael Winter, 17 September 2018, 5940.
[25] Transcript, Michael Winter, 17 September 2018, 5935.
[26] Transcript, Michael Winter, 17 September 2018, 5946, 5948–9.
[27] Transcript, Michael Winter, 17 September 2018, 5926.
[28] Transcript, Michael Winter, 17 September 2018, 5948.
[29] Transcript, Michael Winter, 17 September 2018, 5946.
[30] Transcript, Michael Winter, 17 September 2018, 5950.
[31] Transcript, Michael Winter, 17 September 2018, 5951.
[32] Transcript, Michael Winter, 17 September 2018, 5953.
[33] Transcript, Michael Winter, 17 September 2018, 5954.
[34] Transcript, Michael Winter, 17 September 2018, 5954.
[35] Transcript, Michael Winter, 17 September 2018, 5954.
[36] Transcript, Michael Winter, 17 September 2018, 5954–5.
[37] Transcript, Michael Winter, 17 September 2018, 5955.
[38] Exhibit 6.263, Witness statement of Michael Winter, 24 August 2018, 12–18 [86]; Transcript, Michael Winter, 17 September 2018, 5955–6.
[39] Exhibit 6.263, Witness statement of Michael Winter, 24 August 2018, Exhibit MW-02 (Tab 17) [ALZ.0001.0067.0010]; Transcript, Michael Winter, 17 September 2018, 5960.
[40] Exhibit 6.263, Witness statement of Michael Winter, 24 August 2018, Exhibit MW-02 (Tab 18) [ALZ.0001.0067.0059]; Transcript, Michael Winter, 17 September 2018, 5960.
[41] Transcript, Michael Winter, 17 September 2018, 5975.
[42] Transcript, Michael Winter, 17 September 2018, 5975.
[43] Transcript, Michael Winter, 17 September 2018, 5957.
[44] Transcript, Michael Winter, 17 September 2018, 5967–8.
[45] Transcript, Michael Winter, 17 September 2018, 5976.
[46] Transcript, Michael Winter, 17 September 2018, 5976–7.