The insurer, which is owned by RSA, confirmed that 8,000 motor policy customers had to pay more than necessary for their insurance cover because of the error. Customers have been informed of the company’s error and letters have been sent in recent weeks to affected policyholders, including those whose policies have since lapsed.
The average refund is around €80 while 123.ie is also paying an extra 5% in compensation for the error.
It is expected all affected customers will be refunded by the end of this week. A spokesperson for the insurer said efforts have been made to ensure the “technical” error doesn’t happen again.
“123.ie can confirm that it is currently refunding customers to correct a charging error that affected some motor premiums. The error related to some of the vehicle history information, it was technical in nature and the company has taken steps to ensure it doesn’t recur,” the spokesperson said.
Customers are also being assured in correspondence that the insurer’s “controls have been reviewed and changed to avoid this happening again”.
Dermott Jewell, chief executive of the Consumers’ Association of Ireland, said it was hard to understand how an error could be made with such basic information two years in a row and called for an independent review.
“An overcharging there really raises the question about the need for a full independent review of exactly what were the causes [of the error] and more importantly are there any other areas where a similar event might have occurred even prior to this,” Mr Jewell said.
The insurance company which has 175,000 motor insurance customers in Ireland said that it had discovered the error and informed the Central Bank of its mistake in October 2015. The Central Bank confirmed that it is aware of the situation and the measures 123.ie is taking to remedy this situation.
“As with all errors, the Consumer Protection Code 2012 requires error to be resolved speedily and for customers to be notified and refunded appropriately,” the bank said in a statement.
A spokesperson also urged customers to contact the insurer if they had any queries about the situation.
Mr Jewell said the Central Bank’s response was nowhere near good enough and did nothing to restore consumer confidence.
“It does nothing to restore trust. If anything it raises a serious number of questions in the minds of consumers across a product that they must have by law. So one would have assumed internal and external auditing would have made such an event possible perhaps once but impossible twice; two years on the trot.
“There are far more questions that need to be answered and I think it’s important that the Central Bank raises them and acknowledges that there’s a need for full transparency to restore what is an erosion of trust,” Mr Jewell said.
The insurer’s parent company, RSA Insurance Ireland, recorded pre-tax losses of €171.26m in 2014.
In January, RSA settled with the former chief executive of its Irish operations Philip Smith who won a constructive dismissal case against the company in 2015 in a decision that saw him awarded €1.25m.