ASIC sues QBE over 500,000 ‘misleading’ price discounts

The corporate watchdog is set to haul Australia’s biggest insurer before the Federal Court after accusing it of misleading more than half a million customers about policy price discounts over a five-year period.

The Australian Securities and Investments Commission revealed the suit against QBE Insurance Group on Wednesday.

It said the action relates to the value of discounts offered for more than 500,000 customers between July 2017 and September 2022.

QBE is alleged to have made statements and sent renewal notices promising discounts on premiums for a range of general insurance products, including home, contents and car insurance. But its pricing model potentially eroded the discounts received — in some cases to zero.

The supposed discounts were offered through renewal notices sent by the $25.4 billion group to retirees, loyalty customers, QBE shareholders, those with multiple QBE policies and those with QBE policies who had name no claims.

Statements offering the pricing discounts were also made in product disclosure statements found on QBE’s website.

ASIC deputy chair Sarah Court said those customers were promised discounts for their loyalty when renewing their policies but they didn’t receive them

“The failure by insurers to deliver on pricing promises is a key priority for ASIC and we will continue to take action to hold insurers to account,” Ms Court said.

“Where insurers make discount promises to renewing customers, they need to have robust systems and controls in place to make sure their customers receive the discounts they were promised.”

The legal action prompted an apology over “inconsistencies” from QBE.

In a statement to the Australian Securities Exchange, QBE said it had reported the issue to ASIC following an external review of its pricing practices in 2022.

It has also launched a remediation program to compensate impacted customers.

“QBE apologises for the inconsistencies. QBE understands the importance of meeting its promises to its customers,” the insurer said.

“QBE will review the pleadings and continue to work with ASIC on these matters.”

The case is similar to one launch by the watchdog against two Insurance Australia Group subsidiaries in August last year, with claims they misled customers about the loyalty discounts available for certain types of home insurance.

ASIC alleged loyal customers may have had their premiums increased before discounts were applied between January 2017 and December 2022.

It also follows on from the Australian Competition and Consumer Commission’s decision last month to start legal proceedings against supermarket giants Coles and Woolworths over allegations they breached consumer law by misleading customers through sham discounts.

The ACCC claimed the two majors had on 500 occasions increased the long-standing price of a product, before cutting it shortly after claiming it was either on special or the cost had been lowered.