QBE Insurance Group has acknowledged that the Australian Securities and Investments Commission yesterday announced civil penalty proceedings against its subsidiary, QBE Insurance (Australia) [QBE], in the Federal Court of Australia alleging contraventions of the ASIC Act.
In a statement released yesterday, QBE Group said that the proceedings relate to previously reported inconsistencies in the delivery of price promises made to customers with caravan, householders, marine, and motor policies issued between 1 July 2017 and 24 September 2022.
QBE self-reported the failures to ASIC in October 2022.
Following an external review of its pricing practices in 2022, QBE Group has taken steps to address the inconsistencies, reported the issues to ASIC and has co-operated with ASIC’s investigation which has culminated in the civil penalty proceedings development. QBE Group has also undertaken a remediation programme to remediate impacted customers as announced to the ASX on 19 July 2022.
QBE Group apologises for the inconsistencies. It understands the importance of meeting its promises to its customers. It will review the pleadings and continue to work with ASIC on these matters.
Court proceedings
In a media release, ASIC said that it had commenced court proceedings alleging QBE misled customers about the value of discounts offered on certain general insurance products.
Between July 2017 and September 2022, QBE made statements and sent renewal notices promising discounts on premiums for a range of general insurance products, including home, contents, and car insurance.
ASIC deputy chair Sarah Court said, “ASIC alleges QBE’s pricing model potentially eroded the discounts received by over half a million customers, in some cases to nil.
“Some customers were promised discounts for their loyalty when renewing their policies, which they didn't receive.
“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 in place to make sure their customers receive the discounts they were promised.”
The discounts were offered through more than 500,000 renewal notices to retirees, loyalty customers, QBE shareholders, those holding multiple QBE policies, and those holding QBE policies and who had made no claims. Statements offering pricing discounts were also made in various product disclosure statements published on QBE’s website.
The court proceedings have been filed in the Federal Court. ASIC is seeking civil penalties, declarations, and adverse publicity orders.
ASIC has taken action against other insurers for discount failures. These included:
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Insurers
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ASIC's action
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IAG subsidiaries, Insurance Australia (IAL) and Insurance Manufacturers of Australia (IMA)
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ASIC took action in August 2023, alleging IAL and IMA misled customers about the loyalty discounts available for certain types of home insurance.
ASIC also brought action against IAL in October 2021 alleging it misled customers regarding loyalty discounts available for certain types of home insurance including NRMA branded insurance, resulting in IAL being penalised A$40m ($26.5m) over pricing discount failures in June 2023
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RACQ
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ASIC also initiated proceedings against RACQ for pricing discount failures resulting in a A$10m penalty.
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