Some insurers have failed to provide clear pricing and payment option details in renewal notices, leaving customers without the information they need to make informed decisions, the General Insurance Code Governance Committee says.

The committee reviewed the renewal disclosure practices of 20 insurers and found 12 charged more when customers paid by instalments.

Of those 12, only four clearly disclosed the cost differences and the potential savings available to customers if they paid annually.

“Six insurers did not clearly explain the cost differences between paying annually and paying by instalments at renewals,” the committee said. “Of these six, two insurers maintained that their current approaches were sufficient.”

One of these two insurers relied on disclosing instalment fees across multiple documents, with key information split across schedules, inserts and webpages rather than consolidating details in the renewal notice. The other used general messaging that customers might pay less annually, but it did not quantify the difference at renewal.

“These approaches are not sufficiently transparent,” the committee said today in a report on the review.

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The committee has prioritised compliance with the code of practice obligation around transparency after stakeholders said insurers did not give clear explanations to consumers on premium rises.

Customers paying by instalments may incur an additional cost of about 7%-11%, according to the review.

Committee chair Veronique Ingram says transparency is important for customers deciding whether to continue their cover and how to manage premium costs.

“This is not about telling insurers what pricing model they can use,” she said. “But if an insurer chooses to charge different amounts for different payment options, it must be open and transparent about the implications of that choice.

“Customers are entitled to clear and accessible information before they make a decision.”

Of the six insurers that did not clearly explain cost differences, four are making changes to renewal notices; two have no plans to change their practices.

“We will follow up more formally with these insurers and give them an opportunity to improve their renewal notices,” the committee said. “If insurers are unwilling to adopt sufficiently transparent pricing practices, we will consider further action.”

An Insurance Council of Australia spokesperson says the industry is committed to improving consumer outcomes and will continue working with government, regulators and consumer groups.

“The [code committee] report shows that the vast majority of insurers assessed are meeting expectations or working actively to uplift practices,” the spokesperson told insuranceNEWS.com.au.

“Strengthening consumer outcomes has been a core focus ... and is demonstrated by our ongoing public consultation on a rewritten draft code of practice.”

The committee’s report is available here.