ASIC has published REP 765 on pricing failures identified by general insurers after an ASIC-initiated review of their pricing practices, and the improvements required to fix them.
UPDATE: On 30 June 2023 in Australian Securities and Investments Commission v Insurance Australia Limited, in the matter of Insurance Australia Limited [2023] FCA 724 IAL was penalised $40 million by the Federal Court for failing to honour discount promises made to customers who held NRMA branded insurance policies. The Court found IAL made false or misleading representations to over 600,000 customers between March 2014 and September 2019, by failing to deliver the full amount of loyalty and no claims bonus discounts they had promised to customers when they renewed their NRMA branded motor, home, boat and caravan insurance policies.
ASIC says that a pricing promise is a representation by an insurer to provide a price-related offer (e.g. a discount), a benefit (e.g. gift card, loyalty scheme points or cashback offer), or a reward, including a statement that consumers will save money by taking certain action. This includes multi-policy discounts, no-claims discounts and loyalty discounts.
If pricing promises are not delivered in full, consumers will be overcharged for their policies or not receive all of the benefits.
ASIC says its reviews demonstrated that:
› not all the general insurers reviewed by ASIC have had adequate product governance, systems, processes and controls in place to deliver on their pricing promises
› there has been an ongoing underinvestment in systems, processes and data, and
› the risks of pricing misconduct have been exacerbated by too much complexity in promise design and delivery.
ASIC has identified 10 general insurers which have established remediation programs to compensate affected customers.
If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.
Author: David Jacobson
Principal, Bright Corporate Law
Email:
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
