Millions of Australian credit card holders and borrowers are being urged to check if they are eligible for a refund on junk insurance policies. These policies, often sold alongside loans and credit cards, provide little to no real coverage.
Background of the Scandal
In 2018, a Royal Commission into misconduct in the banking industry revealed that financial institutions had been ripping off customers by selling unnecessary and worthless insurance products attached to loans and credit cards. As a result, banks were ordered to set aside $10 billion to reimburse affected customers. The federal government also introduced stricter regulations to improve transparency for add-on insurance products, aiming to prevent consumers from being sold policies they do not need or cannot use.
Surge in Complaints
Despite these measures, new data from the Australian Financial Complaints Authority shows that junk insurance complaints have skyrocketed by more than 1400% over the last five years, with 7,880 complaints recorded in 2024-25 alone. According to Claimo, a claims management company, an estimated 4.7 million Australians have been sold junk insurance since 2010, but only a fraction have come forward to claim the payout they are entitled to.
Claimo's Success
Claimo has helped 1,600 Australians secure more than $5 million in refunds for these policies. Nathan Mortlock, director of Claimo, said: 'With cost-of-living pressures continuing to mount, these unexpected refunds can act as a meaningful buffer - helping households cover rising expenses without taking on additional debt. Even if nothing is found, checking can give people peace of mind – but many are surprised by what they're owed.'
Who Is Eligible?
Australians who have had car loans, mortgages, credit cards, and personal loans since 2010 are urged to review those policies to check if junk insurance was added without their knowledge. Refunds vary from hundreds to thousands of dollars, depending on the policy. The claims process is usually finalised within 12 weeks.
Customer Experience
Victorian customer Agis Vlahos recovered almost $4,000 after an investigation into old accounts revealed that consumer credit insurance had been attached to a personal loan. 'With the cost of living so high, it was reassuring to recover money that shouldn't have been taken in the first place,' he said. 'A lot of people simply don't realise they may have been paying for insurance they never needed.'
Consumer Advice
Consumers are also urged to be vigilant about the potential risks associated with taking out a loan, mortgage, or credit card and to read the fine print before signing up for any policy. For more information, visit the Claimo website.
