General insurers in Australia will repay over $815 million to more than 5.6 million consumers due to broken pricing promises, according to ASIC. 

A report released by the Australian Securities and Investments Commission (ASIC) this week highlights ongoing pricing failures and calls for insurers to simplify their pricing systems and practices to fulfil their promises to customers.

ASIC intervened in October 2021, directing 11 general insurers to conduct comprehensive reviews and take necessary actions to rectify pricing failures. 

The review covered 2,000 price promises across 500 general insurance products and 50 brands.

The report reveals that insurers lacked adequate product governance, systems, data, and controls to deliver on pricing promises. 

It also highlights unnecessary complexity in pricing practices as the primary cause of the failures, accounting for at least $379 million in remediation. 

Insurers' failure to invest in systems and controls and their inaction despite being aware of pricing risks for years were other contributing factors.

ASIC has initiated civil penalty proceedings against Insurance Australia Limited and RACQ Insurance Limited for allegedly breaching pricing promises and misleading customers. 

The regulator emphasised that prompt repayment of the owed $815 million, implementation of necessary fixes, and the restoration of consumer trust are now the responsibility of the insurers' boards.

ASIC deputy chair Karen Chester expressed disappointment over insurers' delayed actions and warned of further enforcement moves. 

ASIC says it continues to investigate other general insurers for suspected pricing failures.