Group of Aussies eligible for $815m windfall
Australia’s corporate watchdog has ordered insurers to repay overcharged customers $815m over broken promises and pricing failures, with more than 5.6 million customers potentially eligible.
On Friday, the Australian Securities and Investments Commission (ASIC) handed down a report that blasted 11 general insurers for inaction after previous warnings over their unnecessarily complex pricing models.
It found general insurers failed to have adequate product governance, systems, data and controls in place to deliver on their pricing promises and were not always able to oversee and control the pricing promises made by their distributors.
The report also found insurers unnecessarily complicated their pricing promises and practices, with complex pricing blamed for at least $379m of the $815m customers were overcharged.
Insurance Australia Group Limited (IAG), which comprises Insurance Australia Limited (IAL) and Insurance Manufacturers of Australia (IMA) and looks after brands like NRMA, Coles, and Swan – were the worst offenders, owing customers $447.2m across 4,252,000 policies.
ASIC deputy chair Karen Chester said it was a “systematic failure”.
“It’s now up to the boards of general insurers to ensure the prompt and full repayment of the $815m owed to their 5.6 million customers, implement the fixes needed and rebuild consumer trust,” she said.
ASIC said it initially wrote to the insurers in October 2021 and ordered them to “find, fix, report and repay” their pricing failures. Across the 11 insurers, 2000 price deals were reviewed across 500 general insurance products and 50 brands, including AAMI, Youi, Allianz, Medibank and Suncorp.
ASIC also announced civil penalty proceedings against two insurers: Insurance Australia Limited and RACQ Insurance Limited.
Ms Chester was scathing over the inaction.
“It is beyond disappointing that despite past ASIC warnings and action, it took our further direction in late 2021 for general insurers to comprehensively find, fix and repay their customers for these broken promises,” she said.
“Earlier action by insurers would have avoided much of the consumer harm we now see, with $815m in remediation”.
