SYDNEY - Australia's largest insurer has been sued for allegedly deceiving customers to increase their premiums as a law firm lodged a class action suit on Tuesday on behalf of millions of customers.
Law firm Slater and Gordon lodged the class action suit against Insurance Australia Limited (IAL), a subsidiary of the Insurance Australia Group (IAG), in the Supreme Court in the state of Victoria.
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The statement of claim accused IAL of engaging in misleading, deceptive and unconscionable conduct by informing customers they were receiving loyalty discounts at the time of renewing policies with NRMA Insurance, which is part of the group, but not informing them that the discount could be offset by a loyalty tax.
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Ben Hardwick, Slater and Gordon's Class Actions Practice Group Leader, said that the insurer used a pricing algorithm to identify which customers were least likely to switch to a different insurer in response to increasing premiums.
The algorithm then increased the base premium of customers deemed the least likely to switch.
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"We're alleging that millions of Australians paid premiums year-on-year for NRMA home insurance on the promise that they were getting a discount. But in reality, because of this pricing algorithm, long-term customers were unknowingly paying extra in the form of higher base premiums," Hardwick said in a statement.
IAG said in a statement that IAL would defend the proceedings in court and maintained that they have delivered on loyalty offers made to customers, refuting that customers were misled about the extent of discounts they would receive.
Slater and Gordon in May launched another class action lawsuit against IAG insurance brands RACV, SGIO and SGIC over similar allegations after the Australian Securities and Investments Commission in 2023 accused the insurance giant of misleading and deceptive conduct.
