ASIC takes insurer RACQ to Federal Court over ‘misleading’ price hike renewal notices
ASIC claims RACQ sent misleading renewal notices to more than 570,000 customers, allegedly hiding premium hikes as high as 40 per cent during a cost-of-living crisis.
Insurance giant RACQ is facing Federal Court action for allegedly hiding huge price hikes in the renewal notices of more than half a million customers, in one case presenting a 40 per cent increase as just 1.5 per cent.
The Australian Securities and Investments Commission alleges one of Queensland’s largest insurers sent more than 570,000 renewal documents with false or misleading comparison prices for more than five years.
ASIC Deputy Chair Sarah Court said the corporate watchdog was acting against RACQ during a cost-of-living crisis.
“RACQ didn’t just make it difficult to compare apples with apples, we consider customers were potentially left paying more because their insurance renewal documents gave them a distorted picture of the change in their premium,” she said.
The court action alleges that between September 2019 and December 2024, RACQ’s renewal documents showed a “last period premium” that was often higher than what customers had actually paid.
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This happened when customers had previously negotiated a discount or changed their policy, which distorted the real size of their premium increase.
In one example, a customer’s renewal notice showed a “last period premium” of $6930 and a new premium of $7033, suggesting a 1.5 per cent increase. However, the customer had actually paid $5024, meaning the true increase was 40 per cent.
“We are concerned this conduct deprived Australians of the opportunity to compare their renewal information against other insurers to find the best value for money,” Ms Court said.
ASIC claims RACQ knew its documents were misleading because it began receiving customer complaints just two days after introducing the practice, but did little to fix the issue for more than five years.
The alleged conduct affected renewal notices for home and contents, car, caravan, boat and pet insurance.
ASIC is seeking court-ordered declarations, civil penalties and publicity orders against the insurer.
The legal action follows a 2023 case where the Federal Court ordered RACQ to pay a $10 million penalty for misleading customers about pricing discounts.
RACQ said to took its obligations and responsibilities seriously and had “self-reported” the problem to ASIC after it was quizzed by a journalist.
“Late last year, we self-reported a matter to ASIC regarding the communication of the annual comparison price on renewal notices for RACQ Insurance policies following a media enquiry,” the insurer said in a statement.
“Since then, we have been working openly and transparently with the regulator while also conducting our own internal review covering the period since the comparison price was introduced in 2019.
“We also took steps to provide further clarification in our communications to explain the annual comparison between last year’s premium and what is being offered for the upcoming period.
“We then updated our system and renewal policies to make this even clearer.
“We are disappointed this has happened and apologise to our members as this is not in keeping with our high standards or the experience we strive to offer.”
RACQ said it wasworking to improve its risk management practices.
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