ASIC: insurers are overcharging by $815 million

General insurers have overcharged 5.6 million consumers by more than $800 million since 2018, according to a new report from the regulator. The Australian Securities and Investments Commission (ASIC) report follows an intervention that saw 11 insurers ordered to complete “comprehensive reviews” due to “pricing failures.”

“It is beyond disappointing that despite past ASIC warnings and action, it took our further direction in late 2021 for general insurers to comprehensively find, fix and repay their customers for these broken promises,” said ASIC deputy chair Karen Chester.

Civil penalty proceedings against Insurance Australia and RACQ Insurance have started, according to ASIC, for allegedly failing to honour pricing promises or misleading customers.

“We have further investigations underway,” said Chester.

The report, When the price is not right: Making good on insurance pricing promises, also finds:

• general insurers did not have adequate product governance, systems, data and controls in place to deliver on their pricing promises
• pricing promises and pricing practices were unnecessarily complex
• insurers did not always have adequate oversight and controls over the pricing promises made or delivered by the distributors of their products

“It’s now up to the boards of general insurers to ensure the prompt and full repayment of the $815 million owed to their 5.6 million customers, implement the fixes needed and rebuild consumer trust,” said Chester.