Home insurance ‘discounts’ under fire in class action investigation
Hundreds of thousands of home and contents insurance policyholders could be covered by a potential class action lawsuit being investigated by Slater and Gordon.
The law firm is investigating subsidiaries of the Insurance Australia Group, one of Australia’s largest insurance companies. Of concern are RACV, SGIO and SGIC policies provided by Insurance Australia Limited (IAL) and Insurance Manufacturers of Australia Pty Limited (IMA).
Slater and Gordon stated that policyholders covered under these insurers may have been misled about the price of their policies. If launched, the actions could involve a substantial portion of the population, with IAL and IMA having renewed over 1 million home insurance policies between 2017 and 2022.
The issue relates to policyholders who were promised a range of “loyalty discounts” for renewing with IAL or IMA, but were not informed that these discounts were offset by a “loyalty tax” built into the base premium without their knowledge.
Henry Hamilton-Lindsay, a class actions associate with Slater and Gordon, said that it became apparent that the insurers also used an algorithm to determine which customers were least likely to switch to a different insurer in response to increased premiums, and then took steps to increase those customers’ base premiums.
“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,” Mr Hamilton-Lindsay said.
“We believe that money belongs in the pockets of everyday Australians, particularly given the rising cost of living,” he added.
Mr Hamilton-Lindsay encouraged past and present home and contents policyholders with IAL, IMA, RACV, SGIO and SGIC to register their interest in the class action suit via Slater and Gordon.
The news that many Australians may have been swindled out of money by their home insurers comes at a time when residents are already reeling from the increasing cost of insuring their homes.
The Actuaries Institute recently revealed that Australians had just experienced the biggest rise in their home insurance premiums than at any point over the past two decades, with premiums skyrocketing an average of 28 per cent in the past year.
The median home insurance premium now costs $1,894 a year. Moreover, high-risk properties, such as those areas prone to flooding and cyclone damage, have risen by as much as 50 per cent over the past 12 months.
According to the institute, 12 per cent of Australian households are now spending more than one month’s worth of their gross annual income on home insurance.
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