It follows a series of warnings to the industry by ASIC and Hayne Royal Commission into the finance sector. RACQ is among the companies singled out and ASIC has already brought action against the Queensland insurer.

After its warnings to the industry, ASIC wrote to 11 insurers which represented almost 70 per cent of the industry telling to comprehensively review any inconsistencies in pricing.

“The reviews by the 11 participating general insurers identified significant failures to deliver in price discounts, benefits or rewards promised,” a report into the industry said.

“Not receiving the discounts promised meant that more than 5.6 million consumers were overcharged more than an estimated $815 million across more than 6.5 million insurance policies.”

The report said there were also a small number of cases where the insurers had identified pricing failures but decided to take no, or minimal, action.

ASIC has previously taken court action against Insurance Australia and RACQ Insurance for allegedly failing to honour discount promises or misleading consumers.

“We have also commenced other investigations into general insurers involved suspected failures to deliver on price discounts promised,” it said.

IAG’s remediation was by far the largest, worth $447 million over 4.2 million customers. RACQ remediation was $222 million over 759,000 customers. AAI Limited (which includes Suncorp, AAMI, Shannons) would repay almost $20 million.

Allianz’s total was $13 million over 130,000 customers (included the brands Westpac, BankSA, Bank of Melbourne, RAMS and St George). Allianz’s other brands (Allianz, Club Marine and TIO) would repay $4.4 million. Hollard Insurance remediation was worth $9.4 million, Youi’s $4.6 million, Auto and General’s $3.9 million.

Hollard was hit a second time through its Comminsure and Bankwest brands for just under $1 million.

ASIC deputy chair Karen Chester said the report revealed three main causes for the systemic pricing failures.

“First, unnecessary complexity in pricing promises and pricing practices—accounting for the lion’s share (at least $379 million) of the remediation. Second, persistent underinvestment in systems, controls and data. Third, and perhaps the most disappointing, insurers’ inaction despite being on notice for years about these pricing risks,” she said.

“It is beyond disappointing that despite past ASIC warnings and action, it took our further direction in late 2021 for general insurers to comprehensively find, fix and repay their customers for these broken promises. Earlier action by insurers would have avoided much of the consumer harm we now see, with $815 million in remediation,’ said Ms Chester.

“It’s now up to the boards of general insurers to ensure the prompt and full repayment of the $815 million owed to their 5.6 million customers, implement the fixes needed and rebuild consumer trust.”