The insurer that underwrites Woolworths car insurance has overcharged customers

Customers with Woolworths’ Everyday car insurance will be getting refunds after the retailer discovered it had been overcharged by its underwriter for years.

Woolworths has contacted Everyday insurance customers to report they had been overcharged. Picture: Dallas Kilponen

Woolworths has discovered one of the key insurers it uses to underwrite its Everyday Insurance products has been overcharging car insurance policy holders since as far back as 2018 and will start refunding customers.

The supermarket giant’s Everyday Insurance is one of the most popular insurance schemes in Australia.

While the overcharging error is limited to its car insurance, given it covers policy holders from 2018 to 2023 it could mean tens of thousands of Woolworths insurance customers have been overcharged.

Woolworths has begun sending out notices to impacted policy holders, saying the error was discovered by its underwriter Hollard Insurance, a South African insurance firm.

A Woolworths spokeswoman could not provide the total number of insurance customers impacted by the overcharge or the total cost of the error, but said the average being refunded per customer was $27 including interest.

“During a pricing review across our products, we identified that a discount was not applied correctly to your policy, by our underwriter, Hollard,” the letter from Woolworths states.

“Interest on this payment will be calculated and paid at the time of payment. We will provide you with a detailed breakdown of the final payment, including calculated interest and government charges when the payment is being processed.

“We’re sorry for any inconvenience this may have caused. We’ve investigated and improved our processes to ensure this doesn’t happen again.”

A spokeswoman for Woolworths was unable to disclose the number of Australians that have insurance policies with the supermarket through its Everyday Insurance platform but a recent earnings briefing from the company told investors it had more than 1 million insurance and mobile phone customers.

Hollard Insurance is the underwriter for Everyday Insurance home and car insurance policies and is responsible for product underwriting including product design, pricing, risk assessments and claims management.

Hollard, which is one of Australia’s largest general insurers, has self-reported itself to the Australian Securities & Investments Commission.

A spokeswoman for Woolworths Everyday Insurance told The Australian on Monday the overcharging error was discovered following a recent pricing review.

“We have identified instances where certain promotional discounts were not correctly applied on some Everyday Insurance car policies, by our underwriter, Hollard Insurance. As a result, we are in the process of contacting the impacted customers and refunding the additional charges, including any calculated interest,” the spokeswoman said.

“We apologise for the inconvenience this may have caused and together with Hollard, we have improved processes to ensure this does not happen in the future.”

From time to time Everyday Insurance and Hollard offer discounts on car, home and landlords policy premiums which are promotional discounts and applied at the point of purchase.

These discounts are managed by Hollard and executed automatically through the pricing calculation at the point of purchase or renewal.

Supermarket giants like Woolworths and Coles have been broadening their reach into insurance and general financial services for more than a decade with offerings in car, home, landlord and pet insurance with the platform helping to bind shoppers closer to the supermarket if they also get their insurance through it.

This year German discounter Aldi also entered the sector, to offer cheaper home, car and landlord insurance, amid the cost of living crisis.

Backed by Honey Insurance and underwritten by one of Australia’s largest brands, RACQ Insurance, Aldi Insurance promised to offer “straight forward” insurance products by providing the best value and experience at consistently competitive prices.