QBE Insurance Group Ltd (ASX: QBE) shares are under pressure on Wednesday morning.
At the time of writing, the $25 billion ASX 200 stock is down almost 1% to $17.02
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What's going on with this ASX 200 stock today?
The insurance giant's shares are dropping into the red this morning after being hit with civil penalty proceedings.
According to an announcement, the Australian Securities and Investments Commission (ASIC) has launched civil penalty proceedings against its subsidiary, QBE Insurance (Australia), in the Federal Court of Australia. It is alleging contraventions of the ASIC Act 2001 (Cth).
The proceedings relate to previously reported inconsistencies in the delivery of price promises made to customers with caravan, householders, marine, and motor policies issued between 1 July 2017 and 24 September 2022.
In a separate announcement, ASIC's deputy chair, Sarah Court, commented:
ASIC alleges QBE's pricing model potentially eroded the discounts received by over half a million customers, in some cases to nil. Some customers were promised discounts for their loyalty when renewing their policies, which they didn't receive.
The failure by insurers to deliver on pricing promises is a key priority for ASIC and we will continue to take action to hold insurers to account. Where insurers make discount promises to renewing customers, they need to have robust systems and controls in place to make sure their customers receive the discounts they were promised.
ASIC is seeking civil penalties, declarations, and adverse publicity orders.
What did QBE say?
Following an external review of its pricing practices in 2022, the ASX 200 stock notes that it has taken steps to address the inconsistencies, reported them to ASIC, and has co-operated with ASIC's investigation, which has led to today's development.
QBE also notes that it has undertaken a remediation program to remediate impacted customers, as announced to the market back in July 2022.
The ASX 200 stock has apologised for the inconsistencies and said it understands the importance of meeting its promises to its customers. The company will now review the pleadings and continue to work with ASIC on these matters.
Today's civil penalty proceedings announcement follows ASIC's action against insurance rivals Insurance Australia Group Ltd (ASX: IAG) and Insurance Manufacturers of Australia in August 2023, alleging that they both misled customers about the loyalty discounts available for certain types of home insurance.
The QBE Insurance share price is up 12% over the past 12 months.
