ASIC Takes Legal Action Against RACQ Insurance Over Misleading Premium Practices

According to ASIC, RACQ Insurance inflated the 'last period premium' figures in these notices, leading customers to believe that their premiums had increased less than they actually had. This practice potentially resulted in customers overpaying for their insurance policies. The misleading pricing affected various insurance types, including home, car, caravan, boat, and pet insurance.

Despite early customer complaints, RACQ allegedly continued this practice for years. ASIC is seeking civil penalties, declarations, and public orders against the insurer. RACQ, which self-reported the issue in 2024 following media inquiries, has acknowledged the proceedings and stated that it is cooperating with ASIC while conducting its own internal review.

This case underscores the importance of transparency in insurance premium calculations and the need for insurers to provide accurate information to their customers. For small to medium business owners, self-employed professionals, and high-income freelancers, understanding the specifics of insurance premiums is crucial to ensure they are not overpaying for coverage.

To safeguard against such practices, it is advisable for policyholders to:

• Carefully review renewal notices and compare the stated 'last period premium' with previous documentation.
• Seek clarification from insurers if discrepancies are noticed.
• Consider consulting with insurance brokers or advisors to ensure they are receiving fair and accurate premium assessments.

Staying informed and vigilant can help business owners and professionals make better decisions regarding their insurance needs and avoid potential overpayments.