Slater and Gordon has filed a class action on behalf of millions of RACV, SGIO and SGIC customers in relation to how the insurers calculated and promoted loyalty discounts between 2018 and 2024 to entice policyholders to renew their home and contents insurance.
The statement of claim, filed in Victoria’s Supreme Court, accuses the insurers – operating under parent company Insurance Australia Group (IAG) – of engaging in misleading, deceptive and unconscionable conduct by informing customers they were receiving loyalty discounts at the time of renewal, when they may have been charged an artificially higher base premium, so they were not receiving cheaper insurance at all.
It is alleged that policyholders were informed they were receiving the discounts based on the number of years they had been with the insurer and/or the number of other insurance policies they had, for example, car insurance with the same brand.
Slater and Gordon Class Actions Practice Group Leader Ben Hardwick said a pricing algorithm – a computer program – was being used by the insurers to identify the likelihood of policyholders staying with the same brand if their home and contents insurance premiums increased, compared to those who were likely to shop around for an alternative insurer.
“We’re alleging that millions of Australians paid premiums year-on-year to these IAG insurers on the promise that they were getting a discount. But in reality, because of this pricing algorithm they were using, new customers were typically paying less for their policies than loyal customers who had been with them for more than 20 years,” Mr Hardwick said.
“The higher the computer program identified a customer’s perceived price elasticity, the lower the annual premium increases the customer would receive, so loyal customers who were assessed as having low price elasticity and were unlikely to leave, faced steeper increases to their premiums.
“This class action alleges that these customers were denied all relevant information they should have had access to before they renewed their home and contents policies so they could make an informed choice about whether to shop around for a better deal, or at the very least ask for a better price. The reality is that they are likely to have received cheaper insurance from these brands had their loyalty not been a factor in their renewal calculations at all.”
The class action claims the insurers’ conduct was in contravention of financial services laws among other obligations, and that they knew or ought to have known that their conduct was not in customers’ financial interests.
“Home and contents insurance is among the biggest household expenses that everyday Australians face each year, so to learn that these insurers have allegedly been taking advantage of loyal customers in such a way, we say, is unlawful,” Mr Hardwick said.
“This class action is seeking compensation for affected customers for the losses and damage they have suffered as a result of IAG’s conduct.”
Lead plaintiff Angela Williams has had home and contents insurance with RACV for more than 20 years and said she was shocked to learn about the allegations.
“I thought I was getting a good deal,” she said. “If I had known that RACV was actually charging me a higher base premium because of a pricing algorithm, I would have switched right away.”
The 56-year-old medical practice manager said: “I thought they were trustworthy, so it’s really disappointing to hear that they’ve basically been taking advantage of loyal customers in order to make a quick buck”.
SGIO customer Debra Dawson, the class action’s other lead plaintiff, said she was “perturbed” by the alleged conduct.
The 64-year-old has had contents insurance with SGIO for 16 years and said she stayed with them for so long because she was receiving a loyalty discount.
“I thought that the discount was an advantage I couldn’t get with another insurer. That’s why I never sought to renew my policy with another insurer," she said.
IAG is a multinational insurance company that operates through subsidiaries Insurance Australia Limited (IAL) and part-owned subsidiary Insurance Manufacturers of Australia (IMA).
RACV and SGIO and SGIC provided insurance to customers in Victoria, Western Australia and South Australia respectively.
Slater and Gordon is also announcing today that a separate class action investigation has been launched into similar conduct at another IAG-owned brand, NRMA, on behalf of millions of other Australian home and contents insurance policyholders. NRMA operates in all states except Victoria.
“These legal proceedings should put all insurance companies on notice that this kind of misleading, deceptive and unconscionable conduct will be acted upon by consumers,” Mr Hardwick said.
The class action has been issued on a No Win-No Fee basis and group members will not be exposed to any out-of-pocket costs as a result of their participation in the claim. Slater and Gordon intends to apply, at the appropriate time, for a group costs order.
IAG customers (inclusive) can register for the class action or access further information and updates about the proceedings at https://www.slatergordon.com.au/iag
Eligible group members wanting to register their interest in receiving more information about the NRMA class action investigation can do so here: https://www.slatergordon.com.au/nrma
MEDIA OPPORTUNITY: Class actions lawyer Ben Hardwick will be available to answer any media questions about the IAG class action today, Wednesday 29 May 2024, at 11.15am at Slater and Gordon’s new Melbourne office L35 530 Collins Street, Melbourne.
Media Contacts:
Andrea Petrie on 0428 994 937 or andrea.petrie@slatergordon.com.au
Cassandra Yiannacou 0401 322 593 on Cassandra.yiannacou@slatergordon.com.au
Key Facts:
Slater and Gordon has filed a class action on behalf of millions of RACV, SGIO and SGIC customers in relation to how the insurers calculated and promoted loyalty discounts between 2018 and 2024 to entice policyholders to renew their home and contents insurance.
The statement of claim, filed in Victoria’s Supreme Court, accuses the insurers – operating under parent company Insurance Australia Group (IAG) – of engaging in misleading, deceptive and unconscionable conduct by informing customers they were receiving loyalty discounts at the time of renewal, when they may have been charged an artificially higher base premium, so they were not receiving cheaper insurance at all.
Slater and Gordon Class Actions Practice Group Leader Ben Hardwick said a pricing algorithm was being used by the insurers to identify the likelihood of policyholders staying with the same brand if their home and contents insurance premiums increased, compared to those who were likely to shop around for an alternative insurer.
The class action claims the insurers’ conduct was in contravention of financial services laws among other obligations, and that they knew or ought to have known that their conduct was not in customers’ financial interests.
Group members are seeking compensation for the losses and damage they have suffered as a result of IAG’s conduct.
Slater and Gordon is announced today that a separate class action investigation has been launched into similar conduct at another IAG-owned brand, NRMA, on behalf of millions of other Australian home and contents insurance policyholders.
Contact details:
Andrea Petrie 0428 994 937
andrea.petrie@slatergordon.com.au
