ASIC has taken aim at a good little earner among car dealers offering finance packages - the sale of add-on general insurance policies - and concluded "the market is failing consumers". ASIC is putting general insurers on notice that they need to improve consumer outcomes by making substantial changes to the pricing, design and sale of add-on insurance products or face additional regulatory action. It said car buyers obtained little financial benefit from add-on insurance, with consumers paying $1.6 billion in premiums and receiving only $144 million in successful insurance claims - representing a very low claims payout of nine per cent. For some major add-on products, the benefit to consumers was even lower, with consumer credit insurance claims payouts representing just five cents for each dollar of premium.Research cited by ASIC shows that consumers are often unaware that they even have the policy when it is paid upfront as a single premium, and they may not get a premium refund if they repay their car loan early. Policies have been sold where it is impossible for the consumer to receive a claim payout that is greater than the cost of the insurance.The report follows ASIC's release of two reports in February this year about the sale of add-on life insurance by car dealers. ASIC stressed the need for insurers to address the high cost, poor value and poor claim outcomes of life insurance products sold this way.Insurers have notified ASIC that they intend to implement a 20 per cent cap on commissions, which the regulator described as a positive step. Insurers in this market will be also providing ASIC with data on prices, premiums and claims on a regular basis so that it can monitor the impact of changes on consumers.