QBE admits pricing promises 'not fully delivered'

QBE announced today the business is setting aside $US75 million ($110 million) in provision for a customer remediation program after an internal review found “instances” where pricing promises were not “fully delivered” to policyholders.

The insurer says it will record the pre-tax provision – to cover also for interest payable and costs for administering the program – in its first-half financial results for the six months to June. The business will provide further details and an update on the matter when its June half results are released on August 11.

QBE carried out the review after the Australian Securities and Investments Commission (ASIC) called on all general insurers to examine their pricing systems and controls to prevent consumer harm as a “matter of priority”. ASIC made the call in October last year after launching Federal Court action against IAG over its failure to honour customer discount promises.

The insurer says the findings of the Australian Pricing Promise Review have been reported to ASIC and that it is continuing to work on the matter.

“QBE is continuing its review process and will work with ASIC, as required, to ensure affected customers are remediated as quickly as possible,” the insurer says in a market release to the Australian Securities Exchange (ASX).

ASIC says in a statement to insuranceNEWS.com.au that it has received the findings of the review and will continue to “monitor QBE’s planned course of action to remediate affected consumers”.

“ASIC notes the ASX announcement by QBE [today] following its initial review of pricing practices, finding that some pricing promises were not fully delivered to customers, and estimating the scale and extent of the necessary remediation program,” the corporate regulator says.

The regulator says it wrote directly to QBE last October setting out its requirements and expectations for conducting the review and has been monitoring the review’s subsequent progress.

QBE Group CEO Andrew Horton says the business is “working promptly to close out our process, and remediate impacted customers”.

“We are disappointed by the findings of the review and apologise to those of our customers who have been impacted,” he said.

According to ASIC, general insurers have reported a significant number of breaches or potential breaches and remediated thousands of customers in relation to failures to honour price discounts promised to customers since January 2018.

More than $400 million in remediation has been paid to over two million home, car, and other insurance customers since 2018.