Court approves $34M settlement in ‘add-on’ insurance case

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This judgment concerned an application under s 33V of the Supreme Court Act 1986 (Vic) for approval of a proposed settlement of a class action brought against AAI Limited, TAL Life Limited and MTA Insurance Pty Ltd (collectively, the Insurers), arising out of the sale of 'add-on' insurance products to consumers between 1 May 2006 and 30 June 2018.

Maurice Blackburn brought the proceeding on behalf of consumers who purchased ‘add-on’ insurance products (including loan protection insurance, guaranteed asset protection insurance, cash benefit insurance, extended vehicle warranty insurance, and tyre and rim insurance) from car and motorcycle dealerships when they purchased or leased vehicles between 1 May 2006 and 30 June 2018. These products were usually added on to the loans that the dealership arranged for consumers to finance their vehicle purchase.

Consumers claimed the Insurers engaged in misleading or deceptive conduct and breached the Corporation Act 2001 (Cth) by representing to them, that the add-on insurance products:

• were mandatory for finance approval;
• had real value; and / or
• were suitable for the consumer's personal circumstances.

The Insurers denied those claims and pointed to product disclosure statements which contained statements that the purchase of the insurance products was not a condition of obtaining finance (and to the use of scripted disclosures by dealers at the point of sale, confirming that the add-on insurance products were not a requirement for finance approval).

In response to the allegation that the add-on insurance products lacked any real value, the Insurers pointed out that claims had already been paid under the policies taken out by consumers, thereby delivering a real benefit from the coverage.

Two days before the trial was due to start, the proceeding settled for $34 million (inclusive of legal and other costs). Justice Matthews approved the settlement as fair and reasonable having regard to the complexity of the proceeding, the risks attending the claims (including the limitation period issue) and the interests of approximately 40,800 registered group members from a class drawn from approximately 300,000 policies.

The proceeding was conducted pursuant to a group costs order (GCO) at the rate of 25%. Matthews J did not vary the GCO.  There were no objections by group members about the percentage of the GCO.  Her honour was satisfied that the rate was proportionate having regard to Maurice Blckburn’s work and investment and the risks it had assumed. Maurice Blackburn was appointed as settlement scheme administrator.

Anderson-Vaughan v AAI Ltd (Settlement Approval) [2025] VSC 469

Supreme Court of Victoria | Matthews J | 30 June, 4 August 2025
Applicant’s Solicitors: Maurice Blackburn
Defendant’s Solicitors: King & Wood Mallesons

ANDERSON-VAUGHAN v AAI LTD BC202511665
Anderson-Vaughan v AAI Limited & Ors (Settlement Approval) [2025] VSC 469.pdf

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