ASIC Challenges QBE Over Discount Discrepancies

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

According to ASIC, certain pricing mechanisms implemented by QBE inadvertently nullified the promised discounts under specific conditions, potentially reducing them to non-existence.

As ASIC deputy chair Sarah Court emphatically stated that the failure by insurers to deliver on pricing promises is a key priority for ASIC and that they will continue to take action to hold insurers to account. She further emphasized the need for robust systems and controls to ensure customers receive their entitled discounts.

The contentious discounts were marketed primarily through renewal communications to various customer segments, including retirees, loyal clients, shareholders, policyholders with multiple QBE products, and those without claims. Furthermore, these discount offers were featured in QBE's product disclosure statements available online.

ASIC elaborates that the post-discount pricing system at QBE allowed mechanisms like a minimum premium system, alongside cupping and capping procedures, which could significantly alter the actual discount value available to customers.

In response, QBE acknowledged the legal process concerns its delivery of pricing promises on policies such as caravan, household, marine, and motor insurance. These issues, QBE points out, stem from practices between July 2017 and September 2022.

QBE has since undertaken measures to rectify past inconsistencies, submitting a report to ASIC and emphasizing its continued cooperation. They stated in a release, “QBE apologises for the inconsistencies. QBE understands the importance of meeting its promises to its customers. QBE will review the pleadings and continue to work with ASIC on these matters.”

For severity, QBE had reserved $US75 million ($112 million) in July 2022 as part of a remediation initiative aimed at addressing these issues.

The ongoing focus of ASIC on pricing discounts dates back to October 2021, when it instructed several insurers to scrutinize and rectify their discount practices. ASIC further requested 11 companies to “fix, repay and report” any issues associated with such discounts.

According to a regulator report released in June of the previous year, significant corrective measures had led general insurers to repay a cumulative $815 million to in excess of 5.6 million customers due to discrepancies in pricing observed since January 2018.

Such legal entanglements aren’t new for the industry. In recent history, IAG faced action resulting in a $40 million penalty for loyalty discounts related to home insurance under the NRMA brand.

The insurance news source Insurance News Magazine has covered similar outcomes, highlighting challenges faced by major insurers such as RACQ, which incurred a $10 million fine for similar allegations.

Published:Thursday, 24th Oct 2024
Author: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Australian Farmers Confront Rising Insurance Premiums Amid Climate Challenges

22 Mar 2026: Paige Estritori

Australian farmers are currently grappling with a significant surge in insurance premiums, with increases ranging from 20% to 40%, depending on the insurer. This escalation is primarily driven by the rising frequency and severity of natural disasters, coupled with a contracting underwriter market and escalating costs of goods and services. - read more

Widespread Rural Crime Exposes NSW Farmers to Repeated Victimisation

22 Mar 2026: Paige Estritori

A recent survey conducted by WFI Insurance in collaboration with the University of New England (UNE) Centre for Rural Criminology has unveiled alarming statistics regarding rural crime in New South Wales. The findings indicate that over 90% of NSW farmers have encountered criminal activities on their properties, with approximately 30% reporting being targeted seven or more times. - read more

Elders Insurance Highlights Increased Summer Storm Risks for Farmers

22 Mar 2026: Paige Estritori

As the Australian summer approaches, Elders Insurance has issued a cautionary advisory to farmers, emphasising the heightened risk of storm-related damages during this season. Recent data indicates a significant increase in insurance claims due to summer storms, underscoring the need for proactive measures to safeguard agricultural assets. - read more

CGU and WFI Collaborate with Ag Guard to Boost Farm Insurance Services

14 Mar 2026: Paige Estritori

In a significant development for Australia's agricultural sector, CGU and WFI Insurance have announced an exclusive partnership with Ag Guard, a technology-driven agricultural insurance agency. This collaboration, set to commence in June 2026, aims to bolster the agricultural insurance capabilities of both insurers and enhance digital services for brokers, partners, and customers. - read more

Insurance Council Declares Significant Events for Northern Territory and Queensland Floods

14 Mar 2026: Paige Estritori

The Insurance Council of Australia (ICA) has declared two Significant Events in response to the severe rainfall and flooding that have recently impacted the Northern Territory and Queensland. This declaration pertains to the flooding in Katherine and surrounding regions in the Northern Territory, as well as the Bundaberg region and Burnett River catchment in Queensland. - read more

Insurance Council Advocates for Climate Resilience Investment on Cyclone Alfred Anniversary

14 Mar 2026: Paige Estritori

Marking one year since Tropical Cyclone Alfred caused $1.5 billion in insured damages and an estimated $2.7 billion in total economic losses, the Insurance Council of Australia (ICA) has renewed its call for urgent investment in climate resilience. The ICA emphasises the need for proactive measures to mitigate the impact of extreme weather events, which are becoming more frequent and severe due to climate change. - read more

Click for more Insurance News