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As it continues to crackdown on misleading practices from insurers, ASIC launches court proceedings against the insurance giant.

ASIC alleges QBE Insurance misled customers on the value of discounts offered in some of their products.

In a media release, the Commission saysthat between July 2017 and September 2022, the company offered discounts on premiums in over 500,000 renewals for a range of products, including home, contents, and car insurance.

According to ASIC, QBE’s price mechanism could ultimately reduce the value of the discount, including annulling it completely.

“Some customers were promised discounts for their loyalty when renewing their policies, which they didn’t receive,” said Sarah Court, ASIC Deputy Chair.

In the Notice filed to the Federal Court of Australia, ASIC claims that the insurer misled and made false representations about the discounts on the PDSs and SPDSs. Its price mechanism involved “imposing a minimum premium to ensure it was at or above the lowest retail premium QBE was prepared to accept and using pricing algorithms at the renewals to limit the extent of any reduction.”

In these situations, the final premium price did not, in some cases, include the full value of the discount promised by the insurer. ASIC also alleges that QBE did not disclose to the affected customers these minimum premiums or price reduction limits.

ASIC also claims that with the misleading representations, QBE “may have breached sections 12DB(1)(a), (g), (i)), and/or 12DF(1) of the ASIC Act”.

This proceeding follows further action against three other insurers. In August 2023, ASIC brought action against two IAG subsidiaries, IAL and IMA, for misleading customers on available discounts for home insurance. In 2021, ASIC’s proceedings against IAL for misleading customers resulted in the insurer being penalised $40 million.

In the 2023 report “When the price is not right: making good on insurance promises”, ASIC identified several pricing failures, and defined industry standards to support customers. According to ASIC, “general insurers were, at the time the report was issued, remediating over $815 million to more than 5.6 million customers for pricing failures reported to ASIC since 1 January 2018.”

“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 to ensure their customers receive the discounts they were promised.”

ASIC is seekin gcivil penalties and an adverse publicity order from QBE.