ASIC is taking an Australian insurer to the Federal Court on allegations it failed to honour discount promises to customers which totalled around $60 million.
On Friday, the corporate regulator confirmed the civil penalty proceedings against Insurance Australia Limited (IAL), a subsidiary of Insurance Australia Group (IAG), alleging that it engaged in “misleading or deceptive conduct” between March 2014 and November 2019 where some NRMA Insurance customers were told that they were eligible for certain discounts on renewal of their home and motor insurance policies but were then never given the discount.
ASIC further alleges IAL increased the gross insurance premiums that would apply to those customers so their net premiums after the discount would not fall below a certain level. As a result of this, the full discounts were not passed on to customers.
It’s alleged at least 596,000 customers were affected in 705,000 separate insurance policies, approximately 1,785,000 times.
“ASIC is calling on general insurers, including IAL, to ensure customers get the full discounts they are promised,” ASIC deputy chair Sarah Court said.
“This follows industry-wide failures that have led to insurers repaying more than $400 million to over 2 million home, car and other insurance customers since 2018. All insurers should take urgent steps to ensure they can and do meet the pricing promises they make.”
Ms Court has called on all general insurers to review their pricing systems to identify any differences between the prices they promised their customers over at least the past five years, remediate any customers impacted and “fix the systems, processes, controls and governance practices that have led to promised discounts not being honoured”.
ASIC added that any general insurer who fails to review their pricing systems runs the risk of further enforcement action.
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
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