IAG faces class action over RACV, SGIO, SGIC discount failures
Slater and Gordon has filed a class action against IAG over discount failures on several of its brands.
Insurance Australia Group is facing the potential of massive payouts over failing to pass through “loyalty discounts” to customers, with warnings fellow insurers could soon be on the hook for similar issues.
IAG, which runs key brands including NRMA, RACV, SGIO, and SGIC, is facing a class action after law firm Slater and Gordon issued filings against the company in the Victorian Supreme Court, alleging the insurer engaged in misleading, deceptive, and unconscionable conduct.
The case relates to policies sold under the RACV, SGIO, and SGIC brands between 2018 and 2024 for customers in Victoria, Western Australia, and South Australia.
Slater and Gordon alleges IAG told policyholders they would receive discounts on the insurance in recognition for how many years they had been with the insurer or how many other policies they held.
However, Slater and Gordon alleges IAG failed to pass on the full discount to customers they should have been entitled to due to a computer system that priced policies based on their “elasticity”.
The class action claims the insurers’ conduct was in contravention of financial services laws and is seeking compensation for affected customers for the losses and damage they have allegedly suffered.
IAG has remediated customers $60m for the discounting failures.
Slater and Gordon class actions practice group leader Ben Hardwick said instead of given older customers discounts, IAG instead priced policies for new customers at lower rates.
“The higher the computer program identified a customer’s perceived price elasticity, the lower the annual premium increases the customer would receive, so loyal customers who were assessed as having low price elasticity and were unlikely to leave, faced steeper increases to their premiums,” Mr Hardwick said.
“This class action alleges that these customers were denied all relevant information they should have had access to before they renewed their home and contents policies so they could make an informed choice about whether to shop around for a better deal, or at the very least ask for a better price.”
Slater and Gordon also announced it was investigating a separate class action against IAG’s NRMA brand, alleging similar failures to pass through discounts to customers across all states except Victoria.
These legal proceedings should put all insurance companies on notice that this kind of misleading, deceptive and unconscionable conduct will be acted upon by consumers,” Mr Hardwick said.
IAG said it would defend the class action, which comes as the insurer is facing court action from the corporate regulator over the same conduct.
The Federal Court handed IAG a $40m penalty for its pricing failures relating to the NRMA brand in June last year, after action from the corporate regulator.
The Australian Securities and Investments Commission is also now suing IAG over its SGIO, SGIC and RACV brands, alleging similar discount failure with the matter set for a court appearance in October.
IAG shares closed down 3.12 per cent to $6.21.
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