FOI documents reveal a seven-month exchange before QBE’s $109m pricing hit

A freedom of information request reveals QBE and ASIC exchanged emails over a seven-month period leading up to the insurer recording a $US75m ($109.6m) hit for pricing failures.

QBE Group chief executive Andrew Horton. Picture: Britta Campion

Listed insurer QBE was pulled into a meeting with the corporate regulator to discuss past pricing practices almost seven months before it revealed to the market a $US75m ($109.6m) provision to cover its failure to pass on discounts, a freedom of information request has revealed.

A schedule of correspondence between the Australian Securities and Investments Commission and QBE shows the two parties traded emails and phone calls for almost eight months before the remediation hit was made public.

QBE revealed in July it would cop the $US75m hit, to cover remediation, interest, and administration costs after a review of pricing revealed it had failed to properly pass on discounts to past customers.

QBE told investors the sum covered a failure to pass on discounts over several years, across a number of products due to the insurer’s differing policy administration systems and products.

The freedom of information request shows QBE was put on notice by ASIC, after the regulator fired off a letter on October 25 last year, as part of a move which put the broader insurance market on notice.

This came after ASIC hit the Insurance Australian Group with legal action on October 15 claiming the insurer had failed to honour discount promises to customers.

QBE responded to ASIC’s missive on November 1, with the two sides trading a flurry of emails before the regulator pulled in the insurer for a meeting in December.

A list of documents shows ASIC and QBE exchanged emails through early 2022, culminating in a series of emails around the insurer’s pricing review and findings in early July.

The freedom of information request shows QBE and ASIC conducted a phone call on July 14, five days before the insurer revealed the pricing hit, with the two sides again exchanging emails right up until the insurer made known the massive remediation bill.

The detail of the exchange between the two sides has been withheld by ASIC, after QBE objected to The Australian’s request.

ASIC freedom of information senior lawyer Haydar Tuncer said QBE had submitted that “none of the material provided to ASIC is in the public domain”.

“QBE has described in its submissions the detrimental effect it believes disclosure would have,” Mr Tuncer said.

“I also consider that release of this information would have a detrimental effect upon the work of ASIC as a regulator by diminishing the willingness of regulated entities to provide information to assist with ASIC’s inquiries.”

Mr Tuncer noted ASIC’s insurance pricing review was ongoing and any release of the correspondence between the two sides “may compromise ASIC’s future engagement with other insurers who are yet to complete their review”.

“Entities would effectively be discouraged from working cooperatively with ASIC,” she said.

“The result could be that entities significantly alter the way in which they engage with ASIC with a significant impact on the efficient flow and quality of business information which currently exists.”

QBE has flagged its pricing review continues, with the insurer noting in its half year report it had moved to adopt “better pricing models and integration of third party data sets”.

The $US75m was recorded in the half, forming a flurry of blows which dragged down profits from $US441m to $US151m.

The insurer has flagged $53m relates to customer remediation, plus another $15m for interest and $7m to administer the program.