ASIC commences proceedings alleging QBE misled customers on pricing discounts

The Australian Securities and Investments Commission (ASIC), Australia’s corporate, markets, and financial services regulator, has commenced court proceedings against QBE Insurance (Australia) Limited, alleging it misled customers about discounts on certain general insurance products.

The case concerns previously reported discrepancies, where QBE made statements and sent renewal notices offering discounts on premiums for caravan, household, marine, and motor policies issued between 1 July 2017 and 24 September 2022.

These discounts were offered through over 500,000 renewal notices sent to retirees, loyalty customers, QBE shareholders, and those holding multiple policies or no-claims records.

QBE also published discount offers in product disclosure statements on its website.

Sarah Court, Deputy Chair at ASIC, commented, “ASIC alleges QBE’s pricing model potentially eroded the discounts received by over half a million customers, in some cases to nil.

“Some customers were promised discounts for their loyalty when renewing their policies, which they didn’t receive.

“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. 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 court proceedings were filed in the Federal Court, with ASIC seeking civil penalties, declarations, and adverse publicity orders.

In response, QBE stated that following an external review of its pricing practices in 2022, it took steps to address the inconsistencies, reported the issues to ASIC (announced back in July 2022), and cooperated with the investigation.

QBE also launched a remediation program for affected customers, as announced to the ASX on July 19, 2022.

Goldman Sachs analysts noted that QBE has already set aside $75 million pre-tax, including $15 million for financing and other costs, for the remediation effort, with no material changes since then.

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