Insurance Australia Group (ASX:IAG) were penalised in the Federal Court yesterday after failing to pass on the full amounts discounts to NRMA home, motor, caravan and boat insurance customers between March 2014 and September 2019.
The Australian Securities Investment Commission (ASIC) commenced the civil proceedings in court yesterday alleging contraventions of the ASIC Act and the Corporations Act by IAG’s subsidiary Insurance Australia Limited.
When IAG identified the issue in 2019, the company self-reported it to ASIC. IAG reviewed its pricing commitments and promises across its products, and identified impacted customers to provide refunds. The company are now working closely with ASIC through the remediation program.
The customer refunds associated with these proceedings are covered by the customer refund provision that was established in FY20 and FY21, which also covers other products and pricing-related matters, but does not include any potential civil penalty outcome, according to the insurance group.
Progress has been made on the remediation program with more than 80 per cent of affected NRMA Insurance customers having now been compensated in relation to this issue. IAG said they apologise for this failure, recognise that this was unacceptable, and is putting this right for its customers as soon as possible.
IAG also noted that since late 2019, they have enhanced its systems and processes for the delivery of discounts to improve its risk culture and control environment.
Shares in Insurance Australia Group (ASX:IAG) are trading 2.56 per cent lower at $4.95.