Law firm investigates class actions against IAG
Plaintiff law firm Slater and Gordon is looking into potential class actions against IAG over alleged pricing misconduct arising from the use of algorithms to set home premiums.
The announcement today from the law firm comes a week after the Australian Securities and Investments Commission (ASIC) launched civil proceedings against IAG, accusing the insurer of misleading customers about loyalty discounts on certain types of home insurance.
Slater and Gordon Class Actions Associate Henry Hamilton-Lindsay says that an algorithm was utilised by IAG subsidiaries, Insurance Australia Limited (IAL) and Insurance Manufacturers of Australia (IMA), to determine which customers were least likely to switch to a different insurer in response to increased premiums.
“IAL and IMA used an algorithm to determine who was most likely to renew their policy and took steps to increase those customers’ base premiums, despite them often being long-term customers,” Mr Hamilton-Lindsay said.
“We believe that there may be hundreds of thousands of Australians who thought they were receiving discounts by remaining loyal IAL and IMA home insurance customers, but in reality, were being charged hundreds of dollars more each year as a result of that loyalty.”
Slater and Gordon says affected customers bought home policies issued under the RACV, SGIO and SGIC brands and that IAL and IMA renewed over one million home insurance policies between 2017 and last year.
The ASIC civil proceedings in the Federal Court relate to IAL brands SGIO and SGIC and the RACV brand, where policies are provided through the IMA joint venture.
ASIC alleges the calculation for renewing customers involved determining an initial premium, then deducting any discounts and finally adding any government charges.
The regulator alleges the IAG subsidiaries used a pricing algorithm in a way that meant “some longer term or more loyal customers were allocated, or may have been allocated, higher premiums before the promised discounts were applied”.
IAG has declined to comment on the Slater and Gordon announcement, referring insuranceNEWS.com.au to its response to the ASIC legal proceedings. IAG has said it will defend the ASIC allegations.