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Australian Unity to compensate some members over dental benefits

Following an ACCC investigation, Australian Unity has agreed to pay compensation to members who held couple and family policies in 2015 that were likely to have been misled about the dental benefits they could claim from their policy. It is expected that Australian Unity will pay at least $620,000 in compensation to affected consumers.

At the start of 2015, Australian Unity’s Comprehensive Extras policy for couples and families included one overall limit for dental benefits, which was between $1,600 and $2,400 per calendar year. The insurer’s fact sheets, website and terms and conditions in 2015 represented to members that these benefits were fixed and would not change for that year.

Members had been able to choose how to split the annual limit among individual family members. For example, families could use all of the annual limit towards braces for one child. However, in September 2015 Australian Unity changed the way the annual limit worked.

While the total limit for dental benefits was the same, claims for each individual family member were limited to half of the total annual limit. For example, claims for dental work for an individual family member, which had been able to be made up to the entire $1,600 annual limit, were now subject to an $800 limit.

Australian Unity wrote to members notifying them of the change in August 2015.

“Australian Unity’s letter came too late for some families who had already made plans about how they were going to use the dental spending limit during 2015.  People had made plans based on Australian Unity’s original representations that their benefits were fixed for the 2015 calendar year,” ACCC Commissioner Sarah Court said.

“Australian Unity has cooperated with the ACCC and acknowledged that it was likely to have made false or misleading representations and engaged in misleading and deceptive conduct in contravention of the Australian Consumer Law.”

“Insurers must deliver on the claims they make to members. They cannot move the goal posts by selling members a policy with fixed benefits and then changing the rules midway through the life of the policy to reduce those benefits,” Ms Court said.

“Insurers should not rely on fine print disclaimers to reserve the right to make changes to  policies when they have represented that the policy benefits will be fixed for the policy period, as they risk breaching the Australian Consumer Law.”

Australian Unity has provided a court-enforceable undertaking to the ACCC, under which it has agreed for a period of three years that:

  • it will not make a detrimental change to any benefits that are represented as benefits provided for a 12 month period, during that 12 month period
  • it will improve the information it provides to consumers about Australian Unity’s ability to change benefits, including disclosing that Australian Unity is bound by the Australian Consumer Law when making changes
  • it will provide compensation, expected to be at least $620,000, to affected members, including reimbursement for out-of-pocket costs for dental services incurred in 2015, and payment of expenses on ongoing dental plans
  • it will notify members about its conduct and Australian Unity’s commitments contained in the undertaking.

The undertaking is available at http://registers.accc.gov.au/content/index.phtml/itemId/1204280

Members should contact Australian Unity to find out if they are entitled to a refund.