The Australian Securities and Investments Commission (ASIC) will be monitoring industry progress on pricing practices after a review process that has led to remediation payments totalling $815 million to 5.6 million customers. 

ASIC last week released a report on findings after in October 2021 writing to 11 insurers requiring them to complete a review of pricing promises to find any problems, fix deficiencies and repay customers overcharged. 

The insurers reviewed 2000 price promises across more than 500 general insurance products and 50 brands. Remediations related to some 6.5 million policies. 

ASIC says the reviews showed some insurers had inadequate product governance, systems, process and controls in place to deliver on promises, there had been underinvestment in systems, processes and data and issues were exacerbated by excessive complexity in promise design and delivery. 

“Over the medium-to-long term, we would expect to see fewer pricing breaches occurring as more effective delivery systems are deployed, and improved detective and preventative controls are implemented,” the report says. 

“We expect to continue to see some pricing breaches, as there will always be small errors. The key metrics to demonstrate change will be how long the breach has been ongoing and the level of resulting consumer remediation.”  

ASIC commenced civil penalty proceedings against IAG in 2021 and RACQ Insurance in 2023 for allegedly failing to honour pricing promises or misleading customers, and says further investigations are underway. 

The Insurance Council of Australia (ICA) says the ASIC report will be examined to understand improvements needed to ensure better outcomes for customers. 

“While the number of breaches identified and amount of remediation required is disappointing, ASIC notes that general insurers are fixing identified failures in pricing practices and improving systems, controls, processes and governance to ensure pricing promises made to consumers are honoured,” a spokesperson said.    

“All insurers that participated in the review have implemented or are implementing a centralised pricing promise system to support future pricing controls and are taking steps to improve the monitoring and oversight of pricing promises.” 

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