Insurance giant IAG will defend claims it misled customers about the loyalty discounts available for certain types of home insurance.
The Australian Securities and Investments Commission on Friday filed civil penalty proceedings in the Federal Court against IAG subsidiaries Insurance Australia Limited and Insurance Manufacturers of Australia Pty Limited.
The commission claims IAG misled customers about the discounts because loyal customers might have had their premiums increased before the discounts were applied.
Between January 2017 to December 2022, the two subsidiaries renewed more than one million home insurance policies.
The policies involved are the SGIO, SGIC and RACV brands.
"There is a risk that loyal customers, having been promised a discount, were persuaded to stay with these companies, and in doing so lost their opportunity to shop around for a better price," ASIC deputy chair Sarah Court said.
It's also alleged IAG made statements about the loyalty discounts on its brand websites between August 2017 and August 2023.
IAG confirmed it would fight the allegations, maintaining its subsidiaries delivered on their loyalty promises.
"(They) do not agree that they have misled customers about the extent of the discounts they would receive, and intend to defend the proceedings," the company statement read.
ASIC is seeking declarations of contravention, pecuniary penalties and adverse publicity orders against the IAG subsidiaries from the Federal Court.
The date for the first case management hearing is yet to be scheduled.
