Zurich Australian Insurance Ltd has voluntarily agreed to refund almost $50,000 to policyholders after it was found that its premiums had not properly accounted for cost reductions associated with the New Tax System.
"The Australian Competition and Consumer Commission wrote to Zurich about its method used to calculate the premiums on workers' compensation insurance after a customer complaint to the GST Price Exploitation Hotline", ACCC Chairman, Professor Allan Fels, said today.
"Zurich's response showed a systemic failure in their methodology. Inadvertently, indirect tax savings and other input costs reductions, which will flow from the New Tax System, were not factored into premiums spanning 1 July.
"Zurich freely admitted that their calculations were incorrect and have taken swift corrective measures to ensure that all 348 customers get refunds", he said.
In Western Australia, eight customers were overcharged a total of $660.67, while a further 335 customers had been overcharged a total of $48,012.49 in respect of payments made to brokers. Five Zurich customers from Tasmania were also overcharged.
"When calculating the impact of the GST on contracts spanning 1 July, it is important that businesses assess not only the direct impact on themselves, but also the benefits that should be passed on by their suppliers.
"The ACCC recognises that problems will arise, but businesses must understand that consumers will not hesitate to call the GST Hotline [1300 302 502] if they think they have been overcharged.
"The ACCC continues to receive complaints about insurance companies from consumers confused by billing practices and poor information from the companies.
"For this reason, the ACCC encourages businesses to adopt New Tax System Public Compliance Commitments, which can minimise the risk of inadvertent and embarrassing mishaps such as this.
"Zurich's timely response, which will include an explanatory letter to customers, has mitigated against further action by the ACCC".
"The Australian Competition and Consumer Commission wrote to Zurich about its method used to calculate the premiums on workers' compensation insurance after a customer complaint to the GST Price Exploitation Hotline", ACCC Chairman, Professor Allan Fels, said today.
"Zurich's response showed a systemic failure in their methodology. Inadvertently, indirect tax savings and other input costs reductions, which will flow from the New Tax System, were not factored into premiums spanning 1 July.
"Zurich freely admitted that their calculations were incorrect and have taken swift corrective measures to ensure that all 348 customers get refunds", he said.
In Western Australia, eight customers were overcharged a total of $660.67, while a further 335 customers had been overcharged a total of $48,012.49 in respect of payments made to brokers. Five Zurich customers from Tasmania were also overcharged.
"When calculating the impact of the GST on contracts spanning 1 July, it is important that businesses assess not only the direct impact on themselves, but also the benefits that should be passed on by their suppliers.
"The ACCC recognises that problems will arise, but businesses must understand that consumers will not hesitate to call the GST Hotline [1300 302 502] if they think they have been overcharged.
"The ACCC continues to receive complaints about insurance companies from consumers confused by billing practices and poor information from the companies.
"For this reason, the ACCC encourages businesses to adopt New Tax System Public Compliance Commitments, which can minimise the risk of inadvertent and embarrassing mishaps such as this.
"Zurich's timely response, which will include an explanatory letter to customers, has mitigated against further action by the ACCC".