Australia court fines Insurance Australia Group unit a record A$40 mln (updated)

Helia

30/06/2023 08:49

(Adds IAG's response in paragraphs 7 and 8, details on the fine
and background in paragraphs 2-6)
       June 30 (Reuters) - 
    The Australian federal court fined a unit of Insurance
Australia Group Ltd  IAG.AX  a record A$40 million ($26.5
million) for failing to deliver on some discount related
promises made to customers, the country's corporate regulator
said on Friday.
  
        The court said the unit, Insurance Australia Ltd (IAL),
made false representations to over 600,000 customers who did
not, in total, receive more than A$35 million in discounts
between March 2014 and September 2019, the Australian Securities
and Investments Commission (ASIC) said in a statement. 
    The regulator, which had initiated proceedings against the
insurer, said the penalty imposed on IAL is the largest ever
fine imposed by the court against an insurer for breaches of
financial services consumer protection laws. The court also
ordered it to cover ASIC's costs of the proceedings.
    IAL failed to deliver the full amount of loyalty and
discounts it had promised to customers when they renewed their
National Roads and Motorists' Association (NRMA) branded
insurance policies, the regulator said.  
    "IAL used a specific pricing algorithm that limited the
discounts renewing customers could receive, ensuring their
premiums did not fall below a certain price point," ASIC Deputy
Chair Sarah Court said.
    "This pricing method meant promised discounts were not
passed on and customers paid more in premiums than they had been
promised."
         IAG in a separate statement said it acknowledged the
court's decision and that it will also contact relevant
customers with the outcome of the proceedings.
     It has issued refunds to 99% of impacted customers, with
the remaining refunds expected to be issued over the next two
months, it added.
        
  


($1 = 1.5090 Australian dollars)

 (Reporting by Himanshi Akhand in Bengaluru; Editing by Dhanya
Ann Thoppil
and Nivedita Bhattacharjee)
 ((Himanshi.Akhand@thomsonreuters.com;))