Story update below
Australia’s insurance advertising standards and discounting practices are back in the spotlight after ASIC launched Federal Court proceedings against Auto & General Services, the insurer that arranges Budget Direct insurance products, alleging years-long misconduct that left thousands of customers paying more than they expected.
"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 ASIC deputy chair Sarah Court (pictured) in a media release this morning.
The regulator alleges the conduct sits at the heart of a growing enforcement push on pricing claims made to households under cost-of-living pressure — an issue with direct implications for insurers, underwriting agencies and brokers who rely on promotional pricing and digital distribution to compete.
ASIC’s case centres on Budget Direct-branded car, home and motorbike insurance policies purchased online, with the regulator alleging the insurer promoted “significant discounts” of up to 30% to customers who bought policies through its online channel.
The alleged problem, ASIC said, was not simply the size of the discount promoted, but what happened after purchase. Between March 2020 and July 2024, ASIC alleges, around 39,000 customers lost their online discount when they amended their policy during the first year—despite advertising that led consumers to believe the discount would apply for the full year.
According to ASIC, the average loss of the discount was nearly $100 per affected customer, amounting to $3.3 million across the cohort. The regulator alleges the advertising was misleading because customers were not clearly told that the discount would be removed if they made changes such as updating an address—either at the point of signing up online, or at the time the change was made.
For insurers and intermediaries, the allegations cut to a familiar operational reality: customers make adjustments frequently, including address updates, vehicle details, and payment preferences. ASIC alleges that the changes triggering discount removal varied depending on the product, and included amendments such as changes to insured address, insured vehicle details, or altering premium payment frequency. Crucially, ASIC’s case is that customers could lose the discount even though the underlying policy to which the discount originally applied continued.
ASIC also alleges Auto & General became aware of the issue as early as 2016 but did not fix it or alert affected customers for years, with senior staff allegedly aware of the problem without an immediate remedy being implemented.
Auto & General has since paid more than $3.8 million in remediation (including interest) to the approximately 39,000 customers ASIC says were affected in the March 2020 to July 2024 period.
ASIC will seek declarations and civil penalties from the Court, alleging Auto & General contravened section 12DB of the ASIC Act by making false or misleading representations about the price of insurance services, and about the standard, quality, value or grade of those services.
While the proceedings focus on a direct-to-consumer insurer brand, the broader warning is aimed squarely at the industry’s discount design, governance and disclosure processes — especially where customer acquisition leans on headline percentage savings and digital advertising at scale.
The action also lands against a backdrop of ASIC’s stated 2026 enforcement priority targeting misleading pricing practices that worsen cost-of-living pressures. The regulator has repeatedly signalled it expects general insurers to ensure advertised pricing promises are built and maintained so customers actually receive the promoted benefit, and to avoid representations that can be undermined by common, foreseeable policy events.
For brokers, the case could heighten client sensitivity around “discount” representations and the durability of those savings over the first policy year. Even where brokers are not responsible for a direct insurer’s advertising, the proceedings may add friction to customer conversations when comparing market options that rely on introductory discounts, online-only price positioning, or bundled pricing claims.
ASIC positioned the case as part of a broader enforcement pattern in the sector. The regulator pointed to prior and ongoing matters involving alleged misrepresentations about pricing or discounts, including action against IAG, QBE and RACQ, as well as a separate matter in which IAL was penalised $40 million for pricing discount failures.
The strong message for boards and executive teams across insurance distribution models is that discounting frameworks must be treated as a core compliance and conduct risk, not a marketing mechanic. That means tighter product and pricing controls around when a discount applies, what events terminate it, what customers are told upfront, and what disclosures appear at the precise moment a customer action could change the premium outcome.
STORY UPDATE 27/2/26
A spokesperson for Auto & General provided Insurance Business with the following statement:
"Auto & General acknowledges today’s announcement by the Australian Securities and Investments Commission (ASIC) in relation to particular and specified online discount practices in the past. Auto & General self-reported the inadvertent incident to ASIC and apologises to our customers that were affected, noting that the 39,661 financially impacted customers, the subject of these proceedings, have now been fully compensated. The matter only arose when the customers made an amendment to their policy during the first year – primarily either by replacing their insured car or changing their insured address. In the past two years, Auto & General has invested more than $70 million in improvements to its systems and processes for managing its risk and compliance obligations and to prevent such an issue reoccurring. In addition, since this issue commenced, there has been a significant program of transformation to improve our culture of accountability and compliance. Auto & General is committed to continuing to provide affordable, comprehensive and dependable insurance solutions to our loyal customers."
