NSW’s State Insurance Regulatory Authority has issued a $10,000 civil penalty to IAG over compulsory third party breaches. 

The regulator says the breaches resulted in NRMA Insurance failing to be transparent and give accurate information, including around relevant pricing factors, to customers on their CTP renewal policies. 

“While [NRMA Insurance] has co-operated with SIRA and implemented corrective actions, including refunds to affected customers, the penalty reflects the serious nature of the breaches,” SIRA said today. 

The authority will continue monitoring the insurer’s compliance and expects it to maintain “robust controls” to meet its regulatory obligations. 

SIRA found that from October 2018, 21,571 CTP policies were affected by the incorrect application of demerit point loading, causing a total premium impact of more than $1.29 million, including GST and interest. Some 48,451 CTP policies were affected by demerit point loading non-disclosure. 

“The incorrect application and non-disclosure of demerit point loading occurred over a prolonged period of over five years, presenting a significant and sustained contravention of obligations,” SIRA says in a letter to the insurer. 

“The non-compliance appears to have been a systematic issue related to a lack of adequate internal processes and controls. 

“This is evidenced through the incorrect triage of the non-disclosure issue, and the subsequent non-notification to SIRA after a system fix was implemented.”

A spokesperson for NRMA Insurance told insuranceNEWS.com.au that it considers a number of factors when determining CTP premiums, including the type of vehicle, the driver’s age, claims history and demerit point status.
 
"Regrettably, we identified that demerit points had been incorrectly applied to some CTP customers when their policy was due for renewal.

"The error caused the majority of affected customers to be charged an additional $50, on average, for their CTP policy.
 
"The system error was fixed, and two thirds of the impacted customers have been refunded in full, with the remaining customers to be refunded as soon as possible.
 
"NRMA Insurance apologies for the inconvenience caused for customers."
 
The insurer said it self-reported the issue to the appropriate regulators.