Australia regulator sues IAG unit for failing to honour discount promises

(Reuters) – Australia’s corporate regulator commenced civil proceedings against a unit of Insurance Australia Group on Friday, for failing to pass on discounts worth A$60 million ($44.51 million) to nearly 600,000 customers.

The Australian Securities and Investments Commission (ASIC) alleged that Insurance Australia Limited (IAL) – the home, motor and landlord insurance arm of IAG (LON:ICAG) – had failed to apply discounts promised to some customers on the renewal of their home and motor insurance policies.

That impacted insurance renewals between March 2014 and November 2019 pertaining to 705,000 separate policies, the ASIC said.

Shares of the IAG fell nearly 4% following the news.

The legal proceedings come on the back of industry-wide failures that have led to insurers repaying more than A$400 million to over 2 million customers since 2018, the regulator added.

“ASIC is calling on general insurers, including IAL, to ensure customers get the full discounts they are promised,” ASIC Deputy Chair Sarah Court said.

IAG, one of the country’s top insurers, in a separate statement acknowledged the proceedings by the ASIC and said the company had self-reported the issue to the regulator during a 2019 review.

The general insurer also said more than 80% of the affected customers had been compensated and that it was still working with the ASIC through the remediation program.

($1 = 1.3481 Australian dollars)