ASIC has commenced court proceedings alleging QBE Insurance (Australia) Limited (QBE) misled customers about the value of discounts offered on certain general insurance products.
In response via an ASX announcement, QBE acknowledged ASIC's civil penalty proceedings against its subsidiary which alleges contraventions of the ASIC Act 2001 (Cth).
It says the proceedings relate to previously reported inconsistencies in the delivery of price promises made to customers with caravan, householders, marine and motor policies issued between 1 July 2017 and 24 September 2022.
"Following an external review of its pricing practices in 2022, QBE has taken steps to address the inconsistencies. It reported the issues to ASIC and co-operated with ASIC’s investigation which culminated in today's development.
"QBE has also undertaken a remediation program to remediate impacted customers as announced to the ASX on 19 July 2022. QBE apologises for the inconsistencies.
"QBE understands the importance of meeting its promises to its customers. QBE will review the pleadings and continue to work with ASIC on these matters," QBE said in a statement.
ASIC Deputy Chair Sarah Court said, "ASIC alleges QBE’s pricing model potentially eroded the discounts received by over half a million customers, in some cases to nil.
"Some customers were promised discounts for their loyalty when renewing their policies, which they didn't receive.
"The failure by insurers to deliver on pricing promises is a key priority for ASIC and we will continue to take action to hold insurers to account. Where insurers make discount promises to renewing customers, they need to have robust systems and controls in place to make sure their customers receive the discounts they were promised."
ASIC argues the discounts were offered through more than 500,000 renewal notices to retirees, loyalty customers, QBE shareholders, those holding multiple QBE policies, and those holding QBE policies and who had made no claims.
Statements offering pricing discounts were also made in various product disclosure statements published on QBE’s website, ASIC said.
Court proceedings have been filed in the Federal Court. ASIC seeks civil penalties, declarations and adverse publicity orders.
Today’s announcement follows ASIC’s action against IAG subsidiaries, Insurance Australia Limited (IAL) and Insurance Manufacturers of Australia Pty Limited (IMA) in August 2023, alleging IAL and IMA misled customers about loyalty discounts available for certain types of home insurance.
ASIC also brought action against IAL in October 2021 alleging it misled customers regarding loyalty discounts available for certain types of home insurance including NRMA branded insurance. This resulted in IAL being penalised $40 million over pricing discount failures in June 2023. Separately, ASIC also initiated proceedings against RACQ for pricing discount failures resulting in a $10 million penalty.