Farm Insurance :: News
SHARE

Share this news item!

Insurers Accused of Exploiting Loyalty

Insurers Accused of Exploiting Loyalty

Insurers Accused of Exploiting Loyalty?w=400

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.

Slater and Gordon have initiated a class action against three well-known insurance companies, alleging deceptive practices that inflated premiums for loyal customers.
This follows accusations against Insurance Australia Group (IAG) and Insurance Manufacturers of Australia, claiming they misled millions of customers.

The lawsuit, representing customers of SGIO, RACV, and SGIC, alleges that these insurers promised loyalty and multi-policy discounts but ultimately charged higher base premiums. The deceptive practices purportedly stemmed from a computer algorithm designed to manipulate loyalty metrics.

Slater and Gordon’s Ben Hardwick revealed that this algorithm, which ought to favor longstanding clients, actually penalized them. According to Hardwick, “We’re alleging millions of Australians paid higher premiums yearly on the illusion of discounts, when new customers often enjoyed lower rates.”

This pricing tactic leveraged a customer's perceived likelihood to remain with the insurer even as prices rose. Hardwick explained, “Loyal customers, misjudged as having low price sensitivity, faced steeper price hikes compared to others leaning towards switching providers.”

As a result, many long-term policyholders, unaware of the true extent of their premiums, couldn’t make informed decisions regarding their insurance costs. “They would've likely secured cheaper policies had their loyalty not been factored into the pricing algorithm,” Hardwick added.

The broader implication is substantial as household insurance remains one of the significant annual expenses. It is profoundly disappointing for these customers to see their loyalty rewarded with higher charges, ultimately perceived as unlawful profiteering. The legal move aims to gain compensation for adversely affected customers.

Angela Williams, an RACV policyholder for over two decades, echoed the sentiments, saying, “I thought I was securing good deals. Knowing the involvement of a pricing algorithm manipulating my premiums because of my loyalty is shocking.” Similarly, Debra Dawson, a 16-year-long SGIO client, forgone comparative shopping believing her discounts were exclusive benefits. “Had I known, I would’ve considered alternatives,” she remarked.

IAG, responding to these charges, assured that these practices were already under scrutiny due to a previous legal challenge by ASIC. A spokesperson stated, “We uphold we have honored our loyalty commitments and will defend against this class action, striving to continually provide reliable service to our customers.”

This case underscores the delicate balance of customer loyalty and ethical business practices, highlighting how crucial transparency is for consumer protections in the complex field of financial services.

Published:Friday, 31st May 2024
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Rate this article

0 Comments

No comments yet. Be the first to share your thoughts.

Insurance News

Cyclone Pool Delivers Relief, But Farmers Still Need to Check Cover
Cyclone Pool Delivers Relief, But Farmers Still Need to Check Cover
30 Jun 2026: Paige Estritori
The Australian Competition and Consumer Commissions final monitoring report on the cyclone reinsurance pool has delivered a mixed message for rural and regional northern Australia. The pool appears to have helped ease some premium pressure for medium to high cyclone-risk areas, including reductions across home, strata and small business building and contents cover. For farm families and agribusinesses in cyclone-exposed regions, that is welcome news after years of rising costs and limited choice. - read more
El Niño Outlook Puts Farm Risk Planning Back in Focus
El Niño Outlook Puts Farm Risk Planning Back in Focus
23 Jun 2026: Paige Estritori
Australia’s latest El Niño declaration has turned seasonal risk planning into an immediate priority for many rural and regional businesses. The Bureau of Meteorology confirmed El Niño conditions in mid-June, with forecasts indicating the tropical Pacific is likely to keep warming through the coming months and remain a factor until at least the end of the year. - read more
NRMA's Departure from Farm Insurance: What It Means for Australian Farmers
NRMA's Departure from Farm Insurance: What It Means for Australian Farmers
16 Jun 2026: Paige Estritori
In a significant shift within the Australian insurance landscape, NRMA has announced its withdrawal from the farm insurance market, ceasing the sale of new policies as of July 1, 2025. This decision affects both Hobby Farm Insurance and Rural Farm Insurance offerings, leaving many farmers in search of alternative coverage options to safeguard their livelihoods. - read more
New Partnership Strengthens Risk Management in Australia's Protected Cropping Sector
New Partnership Strengthens Risk Management in Australia's Protected Cropping Sector
16 Jun 2026: Paige Estritori
Protected Cropping Australia (PCA) and Achmea Farm Insurance have announced a strategic partnership aimed at bolstering risk mitigation and resilience within Australia's protected cropping sector. This collaboration seeks to empower growers by providing tailored insurance solutions and promoting best practices in risk management. - read more
ABARES Report Highlights Insurance as a Key Tool for Managing Agricultural Risks
ABARES Report Highlights Insurance as a Key Tool for Managing Agricultural Risks
16 Jun 2026: Paige Estritori
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has released a comprehensive report examining the role of insurance as a risk management tool for Australian farmers. The report emphasises that while insurance cannot protect against inevitable events like climate change, it can be instrumental in managing the variability and unpredictability inherent in farming. - read more
ABARES Forecasts Significant Decline in Australian Farm Profits
ABARES Forecasts Significant Decline in Australian Farm Profits
09 Jun 2026: Paige Estritori
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has released a report forecasting a substantial decline in broadacre farm profits, projecting a 70% decrease to approximately $65,000 per farm. This downturn is attributed to escalating input costs and persistent drought conditions affecting various regions. - read more



Farm Insurance Articles

Income Protection for Farmers: Ensuring Stability Through Tough Times
Income Protection for Farmers: Ensuring Stability Through Tough Times
The world of farming is one filled with uncertainties. Weather conditions, market prices, and various other factors can create a highly volatile income stream for those within the agricultural sector. This unpredictability can lead to financial instability that impacts not only the farmers themselves but also their families and the larger rural community. - read more
Agribusiness Risk: Liability Issues Facing Australian Farmers Today
Agribusiness Risk: Liability Issues Facing Australian Farmers Today
The agricultural sector in Australia carves a significant portion of the country's economy, contributing to its GDP and providing employment across rural and suburban areas. Thus, navigating the complexities of agribusiness is not just a matter of crop cultivation and livestock management, but also of understanding the intricate web of liability risks that come with the terrain. - read more
Secure Your Farm's Future: Understanding the Importance of On-Farm Risk Assessment
Secure Your Farm's Future: Understanding the Importance of On-Farm Risk Assessment
In the ever-evolving landscape of modern agriculture, the security and stability of a farm hinge on thorough preparation and strategic foresight. A pivotal component in safeguarding a farm's future lies in the critical role of on-farm risk assessment. This process provides a structured approach to identifying potential risks that could affect a farm's operations, financial health, and overall sustainability. - read more
Top 10 Ways Australian Farmers Can Slash Insurance Costs Without Risking Coverage
Top 10 Ways Australian Farmers Can Slash Insurance Costs Without Risking Coverage
Welcome to our definitive guide for Australian farmers on managing one of the most crucial aspects of their business: insurance. As a cultivator of the land, you're no stranger to the unpredictability of nature and the market. From intense weather events to fluctuating market demands, your line of work comes with its unique set of risks. Hence, safeguarding your livelihood with the right insurance is not just important—it's essential. - read more
When the Rain Doesn't Come: Financial Planning Tips for Persistent Drought
When the Rain Doesn't Come: Financial Planning Tips for Persistent Drought
For farmers across rural Australia, the unyielding dry spells brought on by persistent drought conditions are not just an environmental concern but a significant financial challenge. Effective financial planning becomes a cornerstone strategy for ensuring the resilience and longevity of these crucial agricultural businesses. The prickling heat and parched earth serve as stark reminders of nature's capacity to impact livelihoods, especially when the rain doesn't grace the farmlands for extended periods. - read more
The Farmer's Handbook to Quick and Effective Insurance Claims
The Farmer's Handbook to Quick and Effective Insurance Claims
Insurance is a vital part of safeguarding any farming operation. As a farmer, protecting your property, equipment, and livelihood from unexpected events like natural disasters, theft, or accidents is crucial. Adequate insurance coverage ensures that you can recover quickly from setbacks without enduring overwhelming financial strain. - read more

Need a Quote?
Start your free farm insurance quote comparison here.
Farm Type:
Postcode:

All quotes are provided obligation-free by a participating broker from our national referral partner network. We respect your Privacy.


Knowledgebase
Reinsurance:
Insurance that an insurance company purchases from another insurance company to mitigate risk.