ASIC begins Federal Court action against RACQ Insurance
The Australian Securities and Investments Commission (ASIC) has commenced Federal Court action that alleges RACQ Insurance misled customers over pricing discount promises.
ASIC says motor, home, caravan and trailer and unique vehicle policy disclosure statements indicated that discounts would be applied, but they only applied to the base premium and not to additional amounts paid for certain optional extras.
“We allege that RACQ misled its customers about the discounts to which they were entitled,” Deputy Chair Sarah Court said. “The failure by insurers to deliver on pricing promises is a key priority for ASIC and we will continue to take enforcement action to hold insurers to account in this regard.”
The affected optional benefits were excess free windscreen, hire car, no claim discount protection, increased caravan contents, pet, mobile phone, small susiness contents and items away from home, as well as the extra premium charged for household insurance purchased for unoccupied properties.
The action against RACQ, which relates to cover provided between February 2017 and March 2022, follows similar court action launched in October 2021 over IAG pricing discount promises.
The matter against IAG subsidiary Insurance Australia Ltd (IAL) is listed for the Federal Court on April 3 for an estimated two-day hearing.
RACQ Insurance self-reported its issues after ASIC called on insurers to review their pricing practices in October 2021.
The insurer has since completed a broader pricing promises review, has updated product disclosure statements and has been working closely with the regulator through a remediation program.
The insurer says the majority of refunds for the matter are expected to be issued by June.
“As a member-owned club, we take our responsibilities and obligations seriously and will use this opportunity to ensure our members are better served as we move forward,” it says in a statement acknowledging the ASIC action. “RACQ apologises for these errors as they are not in keeping with our high standards and values.”
RACQ says it’s been undertaking a significant investment in systems and processes that will deliver improved outcomes, stronger risk management, simplified products and easier processes.
