ASIC Sues RACQ Over Alleged Misleading Insurance Renewal Notices
The **Australian Securities and Investments Commission (ASIC)** has launched Federal Court action against insurance giant **RACQ** (Royal Automobile Club of Queensland), accusing the company of misleading hundreds of thousands of customers with false information on insurance premiums. ASIC alleges that RACQ sent over half a million renewal notices containing inaccurate price comparisons, potentially causing customers to overspend between September 2019 and December 2024.
The Allegations Against RACQ
ASIC alleges that **RACQ** sent 573,407 renewal notices that listed an existing premium higher than what the customer was actually paying. This practice, according to ASIC, created a distorted view of how much their premium was actually increasing. The regulator claims that RACQ’s actions contradicted its stated commitment to “pricing transparency” and providing a “more open, fair and honest member experience.”
According to ASIC, this occurred on multiple types of insurance including:
- Home and contents insurance
- Car insurance
- Caravan insurance
- Boat insurance
- Pet insurance
Example of Misleading Comparison
ASIC provided an example where an **RACQ** customer received a renewal notice showing their ‘last period premium’ was $6,930.55 and their new premium was $7,033.57 – a 1.5% increase. However, the customer had actually paid a much lower $5,024.18 premium, which meant RACQ was hiking their renewal premium by 40%. This example illustrates how the misleading 'last period premium' could significantly misrepresent the actual price increase.
ASIC's Response and Concerns
ASIC Deputy Chair **Sarah Court** stated that “Customers should be able to look at renewal documents sent by their insurer and take them at face value.” She further added, "During a cost-of-living crisis, we believe RACQ misled thousands of customers by including false comparison pricing in their renewal documents." ASIC is concerned that this conduct deprived Australians of the opportunity to compare their renewal information against other insurers to find the best value for money.
RACQ's Alleged Awareness and Lack of Action
ASIC alleges that **RACQ** knew the ‘last period premium’ in its renewal documents was misleading customers because the insurer started receiving complaints just two days after commencing the practice. Despite these complaints, ASIC claims that RACQ did little to rectify the issue for over five years, highlighting a significant failure in addressing customer concerns.
Legal Action and Potential Penalties
ASIC will seek declarations, civil penalties and publicity orders from the Federal Court. The regulator views failures by insurers to deal fairly and in good faith with customers as an enforcement priority. The case highlights the importance of accurate and transparent communication from insurers to their customers, especially regarding pricing information.
