Slater and Gordon has launched a class action against IAG’s NRMA Insurance over home cover loyalty discounts, following a similar filing in May related to other brands the company underwrites.

The Victorian Supreme Court filing 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”.

IAG says it will defend the NRMA Insurance class action while also fighting Slater and Gordon’s May filing over policies offered through the RACV, SGIO and SGIC brands.

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

“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,” the company said in a statement today.

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 law firm said in May when filing the other class action that it was investigating similar issues at NRMA Insurance and had invited potential participants to register their interest.

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.

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