IAG Faces New Allegations Amid Loyalty Pricing Scandal
IAG Faces New Allegations Amid Loyalty Pricing Scandal
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
IAG, a prominent insurance provider, has announced its intention to contest a class action put forth by law firm Slater and Gordon in the Victorian Supreme Court.
This lawsuit alleges that IAG misled customers by promising loyalty discounts on home and contents policy renewals that were not genuine.
The class action primarily concerns renewals under the RACV, SGIO, and SGIC brands-already subjects of a Federal Court case initiated by the Australian Securities and Investments Commission (ASIC), which IAG is also disputing.
Slater and Gordon indicate that over 1 million policyholders renewed their insurance with these brands during the six-year period under scrutiny. The firm believes the class action might result in financial compensation reaching millions of dollars.
The allegation from the law firm centers around claims that IAG engaged in deceptive and unconscionable practices. Customers were purportedly led to believe they were receiving loyalty discounts, while they may have been paying inflated base premiums, effectively nullifying the promised reductions.
According to Ben Hardwick, the leader of the class actions practice at Slater and Gordon, a sophisticated pricing algorithm used by IAG determined customers' likelihood of switching insurers. Those likely to stay with their existing insurer were allegedly subjected to higher premium increases.
"Loyal customers believed they were benefitting from discounts when, in reality, their base premiums were increased before any discount was applied," Hardwick explained. "Given that home and contents insurance is a significant expense for many Australians, the notion that loyal customers were possibly exploited in this manner is particularly troubling."
IAG, for its part, denies these allegations. The company stated that its subsidiaries, Insurance Australia Ltd (IAL) and Insurance Manufacturers of Australia (IMA), have delivered on all loyalty discount promises and maintained that they did not mislead customers about the scope of these discounts.
"Both IAL and IMA will vigorously defend the claims brought forth by Slater and Gordon," the company declared.
The contested policies, provided by RACV, SGIO, and SGIC, covered customers in Victoria, Western Australia, and South Australia, respectively. In addition, Slater and Gordon are investigating similar issues with NRMA Insurance, which operates in every state except Victoria.
ASIC's Federal Court case targets policies issued under the SGIO and SGIC brands between August 2017 and January 2023, and RACV policies from August 2017 to August 2023. A case management hearing is set for October 3.
Last year, ASIC identified misleading pricing promises in the insurance sector as an enforcement priority after discovering that many companies lacked adequate systems to ensure they honored their commitments to customers.
In June of the previous year, the Federal Court fined IAG $40 million for failing to uphold discount promises for NRMA-branded policies. Such policies included motor, home, boat, and caravan insurance, and involved a price "cupping mechanism."
Additionally, the court fined RACQ $10 million in November for potentially misleading disclosures regarding available discounts in certain product statements.
According to an ASIC report from June last year, insurers were expected to remit over $815 million to more than 5.6 million consumers stemming from pricing failures identified and reported since January 2018. This involved over 6.5 million policies.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
New Zealand’s younger workers are reshaping the traditional path into insurance. Fresh industry reporting, drawing on Deloitte’s 2026 Gen Z and Millennial Survey and Financial Services Council research, points to a clear shift: many Gen Z and millennial New Zealanders are delaying major life decisions because of financial pressure. Home ownership, starting a family and career changes have long been moments when people reassess life, mortgage and income protection cover. - read more
New Zealand’s financial advice sector is heading into a more targeted year of scrutiny after the Financial Markets Authority’s latest conduct priorities highlighted fraud, adviser commissions and complaints handling as areas of concern for 2026/27. For households arranging life, trauma, income protection or health-related cover, the message is practical: the quality of advice, disclosure and record keeping matters just as much as the premium on the page. - read more
Victoria has moved another step in its building reform program, with the Building and Plumbing Commission now operating with stronger consumer protection powers and a developer bond scheme scheduled for apartment buildings from 1 July 2027. For strata communities, the announcement is not simply a construction law update. It is a reminder that building quality, defect management and insurance planning are becoming increasingly connected. - read more
A recent Australian Financial Complaints Authority decision has delivered a timely reminder for small operators: insurance protection depends on the details being right before something goes wrong. The dispute involved a food delivery business that suffered theft and damage at a site that was not listed on its insurance schedule. - read more
Australia’s insurance broking sector is again facing scrutiny over how clearly small business clients are told about broker remuneration. The latest debate follows the release of a draft update to the Insurance Brokers Code of Practice, after earlier recommendations had supported broader disclosure of fees and commissions to individual and small business clients across more insurance products. - read more
Preventive healthcare refers to measures taken to prevent diseases, rather than treating them after they occur. This includes actions like regular health screenings, vaccinations, and adopting healthy lifestyle practices. - read more
In today's rapidly changing health insurance landscape in Australia, keeping track of costs and coverage can be daunting. Many Australians find themselves grappling with high premiums that seem to increase year after year. - read more
Australia is renowned for its iconic landmarks, diverse ecosystems, and robust healthcare system. While the public healthcare system, Medicare, provides essential health services, it might not cover everything. The allure of private health coverage lies in its promise of broader options, reduced wait times, and coverage for services not included in Medicare, like dental and optical care. - read more
With healthcare being a critical aspect of every family's well-being in Australia, securing the right family health insurance is not just a necessity but a responsibility. Recognizing the importance of this safety net is the first step towards safeguarding the future health needs of your loved ones. Balancing comprehensive coverage against affordable premiums can seem overwhelming with a multitude of plans available. - read more
Welcome to our discussion on basic health insurance cover, a topic that is crucial yet often overlooked in the hustle and bustle of everyday life. Navigating the world of health insurance can be daunting, but understanding your options is vital for peace of mind and financial stability. - read more
Knowledgebase
Subrogation: The process by which an insurance company seeks to recover the amount paid to the policyholder from a third party responsible for the loss.
No comments yet. Be the first to share your thoughts.