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One of Australia’s largest insurance companies is the latest target of Slater and Gordon’s class action lawyers, after the corporate regulator launched an action last month over claims that hundreds of thousands of people were misled about the price of their home and contents policies.  

Slater and Gordon announced on 31 August that it is investigating potential class actions against two subsidiary companies of the Australian Insurance Group (IAG), claiming customers were misled about loyalty discounts on home insurance issued under the RACV, SGIO and SGIC brands.  

The move comes after the Australian Securities and Investments Commission (ASIC) filed an action in the Federal Court against IAG – its second over pricing discounting failures in less than three months.  

Slater and Gordon said the companies renewed over one million home insurance policies between 2017 and 2022 and policyholders were promised a range of “loyalty discounts” but were not informed that those discounts were offset by a “loyalty tax” built into the base premium.  

Slater and Gordon Class Actions Associate Henry Hamilton-Lindsay said that an “algorithm” was used by the insurers to determine which customers were least likely to switch to a different insurer in response to increased premiums.  

“[The subsidiary companies] Insurance Australia Limited (IAL) and Insurance Manufacturers of Australia Pty Limited (IMA) used an algorithm to determine who was most likely to renew their policy and took steps to increase those customers’ base premiums, despite them often being long-term customers,” Hamilton-Lindsay said.   

“We believe that there may be hundreds of thousands of Australians who thought they were receiving discounts by remaining loyal IAL and IMA home insurance customers, but in reality, were being charged hundreds of dollars more each year as a result of that loyalty.”  

“We believe that money belongs in the pockets of everyday Australians, particularly given the rising cost of living.”  

In a statement, IAG said its subsidiary companies would defend ASIC proceedings and “[did] not agree” they had misled customers.  

“IAL and IMA maintain they have delivered on loyalty promises made to customers, do not agree that they have misled customers about the extent of the discounts they would receive, and intend to defend the proceedings,” the statement said.  

Slater and Gordon has an extensive track record of success in class actions and group proceedings, and this investigation comes off the back of its consumer credit insurance class actions against the big four banks, which settled for a combined $176 million. 

Past and present IAL, IMA RACV, SGIO and SGIC customers who held a home and/or contents insurance policy are invited to register their interest in the class action investigation here.