The Australian Securities and Investments Commission (ASIC) has been accused of failing to deal with a complaint against NRMA Insurance.

In a submission to a Senate standing committee on economics inquiry, member of the public Peter Mair says NRMA Insurance offered no-claim discounts for life, but secretly penalised policyholders for their driving records.

The matter was investigated by ASIC in 2006, and a statement was issued saying NRMA Insurance’s parent IAG had changed its advertising and policy documents.

“NRMA Insurance is deliberately deceptive when, contrary to a promised entitlement to a ‘maximum no-claim discount for life’, motor vehicle policyholders entitled to that maximum discount are secretly penalised for five years if they make an at-fault claim,” Mr Mair said.

The Financial Ombudsman Services (FOS) was also involved. After investigation it ordered NRMA Insurance to repay premium rises imposed on policyholders who made subsequent claims.

“NRMA, while well aware of these regulatory concerns generally, and specific ombudsman orders to refund penalty premiums secretly levied on complainants, has made no meaningful change to its deceptive practices,” Mr Mair said.

“It has not voluntarily taken the initiative to address the issues forthrightly – not only to stop the deception but, as well, disclosing penalties secretly levied and refunding penalty premiums secretly taken. 

“Having chosen to dig in, the hole NRMA has dug is ever deeper. The regulatory reaper should have dealt with this intransigence – it has not.”

ASIC should have informed the public of NRMA Insurance’s practices, enforced a change and required the insurer to pay refunds, according to Mr Mair.

“ASIC did not do any of that,” he said. “[When] asked, ‘Why not?’, ASIC’s responses to me fly in the face of this predictable expectation.

“For some two years now ASIC has been saying it is engaged in a general review of industry practices in relation to ‘no-claim discounts’. I am recently advised that this review… is being finalised and is expected to be published by end September.”

NRMA Insurance says it has met all disclosure requirements, where appropriate.

The company “fully complied with the FOS decision”, NRMA Insurance Head of Government and Industry Affairs George Karagiannakis told the committee.

“An extensive – and collaborative – review process ensued, which also included a review of premium complaints in relation to rating factors and incident/claims history. 

“In the 10-month period reviewed, only two of the 360 complaints recorded related specifically to the disclosure of an incident rating and resulting premium increase.” 

Mr Karagiannakis says NRMA Insurance understands both FOS and ASIC were satisfied with the insurer’s actions regarding the complaints.