Major insurer faces legal trouble over online discounts

The corporate regulator claims tens of thousands of Budget Direct customers have lost promised insurance discounts worth a total of $3.3 million in savings.

ASIC has taken legal action against insurer Auto & General Services Pty Ltd, which manages Budget Direct products, after allegedly charging more than 39,000 customers premiums over several years.

The regulator says the misconduct occurred between March 2020 and July 2024.

He wants a declaration and a fine from the court.

Significant discounts of up to 30 percent were offered to Budget Direct customers who purchased vehicle, home or motorcycle insurance policies online.

It is claimed that the ad was misleading because customers were not told that online discounts would be removed following any changes to policies, such as a change of address.

The average premium rebate loss was almost $100.

Auto & General allegedly first became aware of the problem as early as 2016 but failed to notify affected customers for years.

The staff did not try to resolve the issue immediately.

ASIC deputy chairman Sarah Court said the case highlighted the importance of the regulator prioritizing enforcement of misleading pricing practices.

“Australians should be able to trust their insurers at their word, especially when it comes to discounts that influence their decision to buy a policy and compare it to other products on the market,” he said.

“We allege Budget Direct’s behavior was misleading and deprived tens of thousands of Australians of the millions of dollars in savings they were promised.”

Auto & General has since paid more than $3.8 million in compensation, including interest, to 39,000 affected customers over a nearly four-year period.