Rise in insurers overcharging customers: CGC report

“The rise in significant breaches of Code sections covering the sales process or buying insurance is concerning,” said committee chair Veronique Ingram (pictured below). “Overcharging premiums is harmful to consumers and insurers should be doing more to prevent this.”

Ingram emphasised that customers were not normally able to spot bloated premiums or other pricing errors, leaving the responsibility of doing so with the insurer.

In October 2021, the Australian Securities and Investments Commission requested insurers to review their pricing systems and controls to ensure that customers were getting the full discounts they were promised, so the General Insurance Code Governance Committee was expecting an uptick in the number of significant breaches.

However, the level and duration of significant breaches of insurers’ pricing promises surpassed even what the committee anticipated, Ingrid said.

For Prue Monument, general manager of compliance with the code, the news was a reminder for consumers not to renew their insurance policies without first reviewing the renewal documents.

“Don’t assume that the pricing is always right,” she was quoted as saying. “As we’ve seen many times over, there can be errors. Make sure you are clear on the discounts that you are entitled to and … how they are being applied to your policies.”

Overcharging customers is nothing new in the insurance industry, WAtoday reported. In early 2018, the royal commission into misconduct in financial services asked financial services companies to confess their misconduct going back 10 years. Many general insurers confessed to overcharging their customers, which included omitting to apply advertised loyalty, no-claims, or multi-policy discounts.

Ingrid said that some of the significant breach reports related to pricing promises discovered in the fiscal year of 2021-22 had been going on for years, spanning the operation of the former 2014 code as well as the current General Insurance Code of Practice.

The General Insurance Code of Practice was first introduced by the ICA in 1994. Though it is voluntary, members of the ICA that have insurance products covered by the Code are required to adopt it.

What do you think of the reported rise in overcharging customers? Let us know in the comments below.