ASIC is continuing its enforcement actions after monitoring of general insurers’ pricing practices in 2021 resulted in allegations that certain insurers had engaged in misleading or deceptive conduct and made false or misleading representations to some customers by stating that customers were eligible for certain discounts on renewal of their home and motor insurance policies and then failing to apply those discounts. Background.

In 2021 ASIC called on all general insurers to review their pricing systems and controls to prevent consumer harm as a matter of priority. In particular, ASIC said, general insurers should:

• identify any differences between the prices (including discounts) they promised their customers (over at least the past five years) and what those customers were charged;
• comply with their breach reporting obligations;
• remediate any customers impacted, including refunding overpaid premiums; and
• fix the systems, processes, controls and governance practices that have led to promised discounts not being honoured.

The trial of ASIC’s action against Insurance Australia Limited (IAL) in respect of some NRMA Insurance customers is expected to be heard this year.

ASIC has now announced it has commenced civil penalty proceedings in the Federal Court alleging RACQ Insurance Limited (RACQ) misled customers in its PDSs about the pricing discounts between February 2017 and March 2022. ASIC says the discounts were only applied by RACQ to the base insurance premium, and not to additional premiums paid for certain optional extras, which ASIC alleges is misleading.

RACQ self-reported the pricing failure after ASIC called on general insurers to review their pricing practices in October 2021.

UPDATE 1 November 2023: The Federal Court has imposed a $10M penalty on RACQ Insurance.

ASIC will deliver a report on its review of pricing practices in the insurance industry in the first half of 2023.

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Author: David Jacobson
Principal, Bright Corporate Law
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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.