Aussie corporate regulator alleges IAG units misled home insurance customers
Reuters
Published Aug 24, 2023 07:42PM ET
Updated Aug 24, 2023 08:58PM ET
(Reuters) - Australia's corporate regulator said on Friday it filed a lawsuit against two units of Insurance Australia Group (IAG (LON:ICAG)), alleging they misled customers about loyalty discounts available for certain types of home insurance policies.
The Australian Securities & Investments Commission (ASIC) has commenced civil proceedings against Insurance Australia Ltd (IAL) and Insurance Manufacturers of Australia (IMA) in the Federal Court, alleging loyal customers may have had their premiums increased before the promised discounts were applied.
The lawsuit comes at a time when ASIC is tightening its scrutiny over Australia's general insurers, with it previously saying that the country's insurers did not always have adequate oversight and controls over the pricing promises made or delivered by the distributors of their products.
The regulator had also asked the country's general insurers to improve their claims handling practices and resources after it found issues in multiple areas in a review.
Shares of the company were down 2% in early trade, compared to a 1% fall in the broader market.
"IMA and IAL do not agree that they have misled customers and intend to defend the proceedings further," IAG said in a separate release.
"There is a risk that loyal customers, having been promised a discount, were persuaded to stay with these companies, and in doing so lost their opportunity to shop around for a better price," ASIC Deputy Chair Sarah Court said.
The regulator is seeking declarations of contravention, pecuniary penalties and adverse publicity orders against IAL and IMA from the court.
In June, the regulator, in a separate matter, fined IAL a record A$40 million ($25.66 million) for failing to deliver on some discount related promises made to customers.
The date for the first case management hearing is yet to be scheduled, ASIC said.
($1 = 1.5586 Australian dollars)
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Written By: Reuters
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