IAG says it will defend a second class action over home cover loyalty discounts, this time centred on its NRMA Insurance subsidiary.

The Victorian Supreme Court lawsuit, led by Slater and Gordon, follows a similar filing in May related to policies offered through the RACV, SGIO and SGIC brands.

It alleges the insurer engaged in misleading, deceptive and unconscionable conduct by telling renewal customers they were receiving loyalty discounts, without saying they could be offset by a base premium “loyalty tax”.

Slater and Gordon class actions practice group leader Ben Hardwick says a pricing algorithm identified the consumers least likely to switch to a different insurer in response to price increases and raised the base premium accordingly for those customers.

“We’re alleging that millions of Australians paid premiums year-on-year for NRMA home insurance on the promise that they were getting a discount, but in reality, because of this pricing algorithm, long-term customers were unknowingly paying extra in the form of higher base premiums,” he said.

“These customers were denied all relevant information they should have had access to before they renewed their home and contents policies so they could have made an informed choice about whether to shop around for a better deal, or at the very least ask for a better price.”

The class actions involve subsidiaries Insurance Australia Limited (IAL) and Insurance Manufacturers of Australia (IMA).

IAG said in a statement: “IAL and IMA maintain they have delivered on loyalty offers made to customers and do not agree that they have misled customers about the extent of the discounts they would receive.”

Separately, IAG is defending Federal Court proceedings launched in August last year by the Australian Securities and Investments Commission over the use of a pricing model and the application of loyalty discounts.

From Insurance News magazine: Our annual Top 20 insurance influencers and influences list is back, with an intriguing twist on the usual formula