It took a month for the regulator to secure the $10 million, and the remediation is estimated to affect 31,500 Allianz travel insurance customers.
The remediation is for those who either bought a policy directly or through its distribution channels including Expedia and other sites.
ASIC says the refunds are for several forms of misconduct including the sale of policies to consumers who were ineligible to make a claim; partially-paid claims; and for customers who paid overs for policies sold through channels such as Expedia.
Partner websites include not only Expedia, but other travel booking sites, airlines, financial institutions, credit card issuers and others.
As part of the proceedings, Allianz has removed misleading and deceptive statements on its websites and those of its partners; remediated customers whose claims were partially paid; and refunded claims with interest to customers who had purchased insurance directly or through partner sites.
ASIC has encouraged affected policyholders to visit the Allianz website for more information on the remediation program.
"Insurers need to be careful to make sure that they don’t mislead consumers into thinking they have insurance cover for something when they don’t," ASIC acting chair Karen Chester said.
"ASIC has not only initiated civil proceedings concerning an aspect of the conduct, but ensured more than 31,000 consumers are fully remediated."
Pandemic exclusions hit policyholders
While the above policies in question were sold from June 2012 to November 2018, many who attempted to cancel their travel when COVID hit have also been left stranded.
One reader who wrote to Savings.com.au in March found out the product disclosure statement (PDS) of his Allianz policy issued through his ANZ credit card had more exclusions than that of its retail policy.
"I checked this with Allianz and was gobsmacked to discover that they may disallow any claim on the basis of point 14 of the General Exclusion because my trip was stopped as a result of a Government decision," he said.
"Specifically it excludes 'any interference with your travel by any government, government regulation or prohibition or intervention or official authority'.
"It virtually makes travel insurance worthless. I had no control over this event. Why should it matter if the travel is prevented by a Government or private organisation?"
The 'interference' referred to is the Australian Government's travel bans issued for all countries due to the pandemic.
In April, the reader still had not found any luck.
"At this stage we cannot lodge a claim as not all attempts by us to obtain refunds have been finalised plus there are considerable delays by airlines in processing refund claims - up to eight weeks," he said.
"I have not heard if other insurance companies have a similar 'get out of jail' clause."
The reader booked his travel before 31 January, which is when many insurers started cracking down on COVID travel cancellations.
Savings.com.au has since reached out to the reader again, and has also contacted Allianz for comment.
Have a COVID-19 travel insurance story? Get in touch.