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The corporate watchdog has accused insurance giant RACQ of lying to half a million customers about savings by providing false information on insurance premiums, potentially fooling them into overspending.
The Australian Securities and Investments Commission revealed on Tuesday it had launched Federal Court action against the company over an anticompetitive “pricing transparency” practice.
The regulator alleged RACQ, one of the largest insurers in Queensland, sent 573,407 renewal notices that listed an existing premium higher than what the customer was actually paying in a five-year period between September 2019 and December 2024.
ASIC deputy chair Sarah Court said RACQ claimed it was providing pricing transparency but “did the exact opposite”.Credit: Louie Douvis
“Customers should be able to look at renewal documents sent by their insurer and take them at face value,” ASIC deputy chair Sarah Court said.
The watchdog found the “last period premium” listed on renewal documents had not considered discounts or policy changes, and was therefore often higher than the actual amount a customer was paying.
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In one example provided by ASIC, a customer was told they would pay a 1.5 per cent increase on their insurance, but the documentation quoted their existing premium as $1906.37 more than the actual amount the customer paid – making the actual increase closer to 40 per cent.
In court documents put before the Federal Court on Monday afternoon, ASIC claimed RACQ had received complaints from customers about the notices two days after making the changes.
The documents also claimed RACQ received additional complaints across the five-year period, including one to the acting chief executive in 2019, and others via external bodies, such as the Australian Financial Complaints Authority.
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In a statement released on Tuesday morning, RACQ said it self-reported the matter to ASIC in late 2024 and was working “openly and transparently” with the regulator.
The insurer said it had launched its own internal review to run parallel to ASIC’s investigation.
“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,” the statement read.
“We then updated our system and renewal policies to make this even clearer.”
RACQ apologised to its customers, adding the behaviour was “not in keeping with our high standards or the experience we strive to offer”.
ASIC said the practice had been anticompetitive and broke consumer laws concerning false or misleading representations used in business dealings.
“RACQ claims it was providing ‘pricing transparency’ to members and a ‘more open, fair and honest member experience’, but we allege their misleading comparison pricing did the exact opposite,” Court said.
“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.”
The regulator said RACQ offered the allegedly misleading comparisons across different insurance types, including home and contents, car, caravan, boat and pet policies.
ASIC is now seeking declarations, civil penalties, and publicity orders from the Federal Court.
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