Tens of thousands of Budget Direct customers lost online insurance discounts they were promised and were overcharged for premiums as part of misconduct that went on for years, the Australian Securities and Investments Commission (ASIC) has alleged in a new legal case.
In Federal Court proceedings launched against Auto & General Services, the insurer that arranges Budget Direct insurance products, ASIC alleges that:
- between March 2020 and July 2024, Auto & General advertised significant discounts of up to 30% for Budget Direct customers who purchased car, home or motorbike insurance policies online with the advertisements being viewed by millions of consumers;
- approximately 39,000 customers lost their online discount after making amendments to their policy during the first year. The average premium discount loss amounted to nearly $100 and across the cohort was worth AUD$3.3m.
It is ASIC’s case that the advertising was misleading because customers were not told the discounts would be removed following any changes such as a change in address, either at the time they signed up, or at the time that they made the change.
ASIC alleges Auto & General first became aware of the issue as early as 2016 but failed to fix it or inform affected customers for years.
“We have taken multiple cases alleging failures by insurers to deliver on their pricing promises to customers. In this case we allege Budget Direct removed discounts without notice if the customer made certain changes to their policy details, leaving tens of thousands of people out of pocket,” said Sarah Court, deputy chair of ASIC.
“Australians should be able to take insurers at their word, especially when it comes to discounts that influence their decision to take up a policy and compare it to other products in the market.
“We allege Budget Direct’s conduct was misleading and deprived tens of thousands of Australians millions of dollars in savings they were promised,” Court said.
Auto & General has since paid over AUD$3.8m in remediation to around 39,000 customers affected between March 2020 and July 2024, and ASIC will seek civil penalties from the court.
