- Insurance Australia Group (IAG) shares sink after the corporate watchdog announces civil action against an IAG subsidiary for failing to honour promised discounts
- The Australian Securities and Investments Commission (ASIC) alleges IAL misled and deceived customers by offering them discounts, then upping their premiums
- The watchdog says the false discounts affected 596,000 customers who missed out on a total of $60 million in savings
- IAG says it self-reported the issue to ASIC back in 2019 after it was made known to management through a proactive business review
- The company says it aplogises for the failure and has been working to repay customers, with over 80 per cent of affected customers already having been paid back
- Shares in Insurance Australia closed down 3.15 per cent at $4.92 each
Insurance Australia Group (IAG) shares are sinking today after the corporate watchdog announced civil action against an IAG subsidiary for failing to honour promised discounts.
The Australian Securities and Investments Commission (ASIC) will take Insurance Australia Limited (IAL) to the Federal Court for failing to pass on the full amount of discounts offered to almost 600,000 NRM Insurance customers.
ASIC alleged IAL misled and deceived customers between March 2014 and November 2019 by offering them certain discounts for renewing home and motor insurance policies, but then upping these customers’ premiums to offset the discount.
The watchdog said the false discounts affected 596,000 customers who, combined, missed out on $60 million worth of savings.
ASIC Deputy Chair Sarah Court said the IAL legal action followed industry-wide failures that have seen insurers pay back more than $400 million to over two million customers since 2018.
“ASIC is calling on general insurers, including IAL, to ensure customers get the full discounts they are promised,” Ms Court said.
“All insurers should take urgent steps to ensure they can and do meet the pricing promises they make.”
In a statement to the ASX, IAG said it self-reported the issue to ASIC back in 2019 after it was made known to management through a proactive business review.
The insurance giant said it had since been working with ASIC to rectify the issue, with over 80 per cent of the affected NRMA Insurance customers having been paid back the discounts they were owed through a remediation program.
“IAG reviewed its pricing commitments and promises across its products, and
identified impacted customers to provide refunds,” the company said.
“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.”
Shares in Insurance Australia closed down 3.15 per cent at $4.92 each.