Australian insurer QBE will record a USD 75 million pre-tax remediation cost in 1H 2022 as part of its investigation into pricing practices, which is part of a wider industry review by the Australian Securities and Investment Commission (ASIC).
QBE has been investigating pricing practices dating back numerous years, across various policy administration systems and products.
Although the work is ongoing, the carrier has identified instances where the policy pricing promise was not fully delivered. As a result, QBE will record a provision in 1H 2022 to cover expected customer remediation, interest payable and costs for administering the program of USD 75 million, pre-tax. The insurer says that this cost will be excluded from the Management Basis underwriting result.
The firm has reported details and findings of its initial review to ASIC and will continue to work with the regulator as its review process continues, to ensure customers impacted are remediated as soon as possible.
Andrew Horton, Group Chief Executive Officer (CEO), commented: “We are disappointed by the findings of the review and apologise to those of our customers who have been impacted. We are working promptly to close out our process, and remediate impacted customers.”
In October of last year, ASIC called on insurers in the country to review their pricing practices after it launched civil penalty proceedings in the Federal Court against Insurance Australia Limited (IAL), after the firm failed to honour discount promises it made to its customers.
At this time, ASIC Deputy Chair, Sarah Court, said: “ASIC is calling on general insurers, including IAL, to ensure customers get the full discounts they are promised. This follows industry-wide failures that have led to insurers repaying more than $400 million to over 2 million home, car and other insurance customers since 2018. All insurers should take urgent steps to ensure they can and do meet the pricing promises they make.
“This may require insurers to update legacy IT systems and make improvements across compliance, governance and culture. Where there are failures, or empty promises about price discounts, ASIC will use the full range of regulatory tools available to protect consumers – including enforcement action.”