200,000 RAA Insurance clients to receive reimbursements in embarrassing blunder

More than 200,000 RAA clients are set to receive refunds after the giant discovered it had applied rubbery sales tactics on some products.

RAA chief executive Nick Reade. Picture: NCA NewsWire / Naomi Jellicoe

The RAA has started paying about 200,000 current and formers members more than $25m reimbursement for rubbery insurance pricing promises.

The repayments include the overcharged premium, GST, stamp duty and interest.

The embarrassing repayments follow a scathing conclusion to a national inquiry into insurance pricing by ASIC that will lead to 11 big-name general insurers repaying $815m to more than 5.6 million consumers, across 6.5 million policies, for “broken promises”.

The RAA was not one of the big 11 but following the ASIC inquiry, in 2022 it reviewed pricing promises made in marketing material, product disclosure statements and “online sales journeys”.

This found its pricing was consistent with their Product Disclosure Statements but in some cases could have been clearer in marketing and promotional material.

It found some discounts promoted between April 2012 and April 2024 “weren’t applied in line with some of our advertising material”.

“As a result, around 200,000 current and former members will receive a payment from us as part of the program,” a statement to affected members says.

RAA now is in the process of emailing, sending letters, calling and SMSing customers in a project that includes asking them to give bank details to a secure site.

It notes if anyone is concerned it may be a scam they should visit the RAA website and search for the “remediation program” page.

The RAA has started paying about 200,000 current and formers members more than $25m in reimbursements for rubbery insurance pricing promises. Picture: Brenton Edwards

RAA Insurance chief executive Tara Page said: “RAA holds itself to an extremely high standard and we always try to do the right thing by our members.

“That’s why we got on the front foot, undertook a review, fixed the issue and are now reimbursing affected current and former members.

“Our remediation program is well and truly underway, and we’ve already reimbursed about 33,000 members.

“We’ve set up a dedicated team to help get that money back to members as quickly and securely as possible, and also support them if they have any questions or concerns.”

ASIC has called on all general insurers to remove unnecessary pricing complexity and deliver on the pricing promises they make to their customers.

“This systemic failure by insurers to deliver on their pricing promises has seen more than 5.6 million consumers overcharged $815 million for their insurance,” ASIC deputy chairwoman Karen Chester said when the report was released.

The ASIC report also found general insurers did not have adequate product governance, systems, data and controls in place to deliver on their pricing promises, and that pricing promises and pricing practices were unnecessarily complex.

Ms Chester described it as “beyond disappointing” that despite past ASIC warnings and action, it took ASIC’s further direction in late 2021 for general insurers to comprehensively find, fix and repay their customers “for these broken promises”.

Originally published as 200,000 RAA Insurance clients to receive reimbursements in embarrassing blunder