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Slaters investigating home insurance for class action
Insurance Australia and Insurance Manufacturers of Australia are being investigated by a leading class action firm for allegedly misleading policyholders about prices.
Naomi Neilson
Slaters class actions associate Henry Hamilton-Lindsay said it was likely “hundreds of thousands of Australians” may have been overcharged because of an alleged scheme employed by Insurance Australia Limited (IAL) and Insurance Manufactures of Australia (IMA).
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IAL and IMA are subsidiaries of the Insurance Australia Group, which also includes RACV, SGIO and SGIC branded home insurance products. The class action may likely be brought on behalf of policyholders with RACV, SGIO and SGIC policyholders.
Mr Hamilton-Lindsay alleged an algorithm was used by insurers to determine which customers were least likely to switch to a different insurer in response to increased premiums on their policies.
He said IAL and IMA “took steps to increase those customers’ base premiums, despite them often being long-term customers”.
These same customers were also promised a range of “loyalty discounts” if they renewed, but were not informed he discounts were also offset by a “loyalty tax” built into the base premium.
“We believe that there may be hundreds of thousands of Australians who thought they were receiving discounts by remaining loyal IAF and IMA home insurance customers, but in reality, were being charged hundreds of dollars more each year as a result of that loyalty.
“We believe that money belongs in the pockets of everyday Australians, particularly given the rising cost of living.”
