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Insurer responds to Federal Court action by ASIC

Insurance Australia Group (IAG) has responded to civil penalty proceedings commenced by ASIC in the Federal Court against its subsidiary.

On Friday, the corporate regulator confirmed it had launched action against Insurance Australia Limited (IAL) on allegations it failed to honour discount promises to customers which totalled around $60 million.

ASIC has alleged that between March 2014 and November 2019, 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.

It’s alleged at least 596,000 customers were affected in 705,000 separate insurance policies, approximately 1,785,000 times.

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IAG has since responded to the proceedings, saying it self-reported the issue to ASIC in 2019.

“The customer refunds associated with these proceedings are covered by the customer refund provision that was established in FY20 and FY21, which also covers other products and pricing-related matters, but does not include any potential civil penalty outcome,” a statement issued by IAG read.

“Considerable progress has been made on the remediation program, with more than 80 per cent of affected NRMA Insurance customers having now been compensated in relation to this issue.

“IAG apologises for this failure, recognises the significance and that this was unacceptable, and is putting this right for its customers as soon as possible.”

The news resulted in ASIC deputy chair Sarah Court calling 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”.

Insurer responds to Federal Court action by ASIC
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Neil Griffiths

Neil Griffiths

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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