RACQ disputes ASIC claim over renewal notices, despite earlier apology

A court fight over how renewal prices were presented

RACQ is contesting allegations that its insurance renewal notices misled customers, arguing in Federal Court filings that the documents would not have deceived an “ordinary and reasonable policyholder”. The position contrasts with the organisation’s earlier public apology, issued after the corporate regulator began legal action over how renewal pricing was described.

The Australian Securities and Investments Commission (ASIC) sued the customer-owned insurer last year, alleging that renewal certificates issued over several years compared an upcoming premium against a “last period premium” that did not reflect what customers had actually paid. RACQ has responded by emphasising that, regardless of what appeared on the notices, the amount charged to customers “at all times was correct”.

The dispute matters because renewal notices are a key moment in the relationship between insurer and policyholder. They are often the point at which customers decide whether to remain with their existing provider or shop around. ASIC’s case centres on whether the comparison presented in RACQ’s renewals could have influenced that decision-making by understating the size of premium increases.

What ASIC alleges happened between 2019 and 2024

ASIC alleges that at least 434,548 renewal certificates were issued between September 2019 and December 2024 in which the “last period premium” did not match the amount actually paid by the customer. The notices covered multiple product types, including home, boat and pet insurance.

The core issue, as set out in the regulator’s allegations, is the comparison format used in these renewal documents. Customers were shown an upcoming premium for the new period alongside a “last period premium” figure. However, ASIC says that “last period premium” could be higher than the customer’s true prior-year cost because it did not necessarily incorporate adjustments such as discounts negotiated after an initial quote.

In other words, the renewal notice could present a comparison that made the new premium look closer to the previous year’s price than it really was, depending on what the customer ultimately paid after changes were agreed during the prior policy period.

A worked example: how a rise could appear smaller than it was

One example cited in the material involves an RACQ customer, John Monks, who received a renewal notice for his Gold Coast home. The notice showed a “last period premium” of $6,930.55 and a new “this period premium” offer of $7,033.57. On those figures, the increase would appear to be about 1.5 per cent.

But ASIC’s case points to the fact that Mr Monks had negotiated a discount and paid $5,024.18 in the previous year. If that paid amount is used as the baseline, the renewal price rise would be 39.9 per cent. The example illustrates the regulator’s concern: customers reading the renewal notice might interpret the change as modest, even if the increase from what they actually paid was much larger.

ASIC also alleges that customers had complained to the insurer since 2019 that the comparison was “very misleading”.

RACQ’s public apology and subsequent change to notices

When the issue became public last year, RACQ announced it had stopped the practice and changed its renewal notices to reflect actual pricing changes. The organisation issued a strong apology, saying it was “disappointed this has happened” and apologising to members because the practice “is not in keeping with our high standards or the experience we strive to offer”.

That apology acknowledged a gap between the organisation’s stated standards and the way the renewal comparison had been presented. It also signalled that RACQ accepted the need to change how information was displayed to customers going forward.

However, the legal dispute is about what happened during the period in question and whether the earlier notices were misleading in a way that breaches the law. The case therefore turns not only on what RACQ has changed since, but on what a typical customer would have understood from the documents at the time they were sent.

RACQ’s defence: customers knew the context, and prices charged were correct

In defence documents, RACQ rejects ASIC’s allegation that an average policyholder would have believed the “last period premium” was the amount they had actually paid. The insurer argues that policyholders would have been aware of their initial premium quote, any subsequent changes to that quote, and the reasons they sought those changes. On that basis, RACQ says an “ordinary and reasonable policyholder” would have understood the context of the “last period premium” number shown on the renewal notice.

RACQ has also maintained publicly that the lawsuit concerns what was listed on the renewal notice, not what customers were charged. It says the price charged to customers “at all times was correct”. This distinction is central to its messaging: even if the comparison reference point was disputed, RACQ contends it did not overcharge customers relative to the premium that applied after any agreed adjustments.

In addition, RACQ’s defence attempts to reduce the significance of ASIC’s allegation that the notices could have affected customer behaviour. ASIC has suggested customers might have missed opportunities to shop around if they were not given accurate comparisons. RACQ argues that renewal rates were not materially different between unaffected and affected customers.

ASIC’s reply: customers shouldn’t be expected to cross-check old paperwork

ASIC’s legal reply challenges RACQ’s argument that customers would have understood the context. The regulator says the renewal notices did not clarify that the “last period premium” had been subject to adjustments. Even if a customer had negotiated changes earlier and received paperwork at the time, ASIC argues it is not reasonable to expect customers to remember those details or cross-reference them against the “last period premium” shown on a later renewal notice.

This part of the dispute goes to a practical question: how consumers actually read renewal letters. ASIC’s position is that renewal documents should be clear on their face, without requiring customers to reconstruct past negotiations or hunt through older correspondence to understand whether a comparison is like-for-like.

How widespread were the differences in the comparison figures?

The court documents indicate the scale of the issue is significant. ASIC’s case refers to at least 434,548 renewal certificates over the relevant period where “last period premium” did not reflect the actual amount paid.

RACQ’s materials also indicate that roughly 70 per cent of those renewal certificates had a comparison premium that was higher than what customers had truly paid. At the same time, RACQ says that in a majority of the affected certificates, the difference between what customers actually paid and what they were told was the “last period premium” was less than $200.

Those two points sit alongside each other in the dispute. One highlights the frequency with which the comparison baseline may have been higher than the true paid amount. The other emphasises that, in many cases, the dollar gap was relatively small, even if the principle of the comparison is what the regulator is challenging.

Why the “last period premium” label matters

At the heart of the case is the meaning a consumer would attach to the phrase “last period premium”. ASIC alleges that the label, presented as a comparator to the new premium, would naturally be read as the amount paid for the last policy period. RACQ disputes that, arguing customers would understand it in the context of the earlier quote and subsequent adjustments.

The dispute is not simply semantic. A renewal notice that appears to show a small increase may reassure a customer that their premium is rising only modestly, while a comparison to what they actually paid could show a much larger jump. The Monks example included in the allegations is used to illustrate how that difference can change the apparent size of a rise.

ASIC’s broader concern, as set out in the case, is that customers receiving such notices might be less likely to shop around if the increase appears smaller. RACQ’s defence seeks to counter this by saying renewal rates were not materially different between those affected and unaffected.

Customer complaints and a broader backdrop of dissatisfaction

ASIC’s lawsuit alleges that customers had complained to RACQ since 2019 that the comparison was “very misleading”. The dispute also sits against a backdrop in which RACQ has experienced a spike in complaints as premiums rise and insurance claims are mishandled, according to the information provided.

While the court case focuses on renewal notices and the accuracy of comparisons, the broader context underscores why renewal communications can become a flashpoint. When premiums are increasing, customers tend to scrutinise renewal documents more closely, and dissatisfaction can grow if they feel the information they receive does not match their experience of what they paid.

What RACQ says about the legal process

RACQ has said it is required to respond to ASIC’s statement of claim as part of the legal process. That statement reflects the reality that a public apology and operational changes do not necessarily resolve the legal questions raised by a regulator, particularly where the regulator alleges a large number of affected documents over a multi-year period.

In practical terms, the case will turn on how the renewal notices were structured, what they conveyed to recipients, and whether the presentation of a “last period premium” that did not match the paid amount is misleading in the way ASIC alleges.

Key points from the dispute

• ASIC alleges at least 434,548 renewal certificates issued between September 2019 and December 2024 used a “last period premium” that did not reflect the amount actually paid.
• The renewal notices compared the upcoming premium against a “last period premium” that could exclude adjustments such as discounts negotiated after an initial quote.
• RACQ has said the lawsuit concerns what was shown on the notices, while the price charged to customers “at all times was correct”.
• RACQ publicly apologised last year, ceased the practice, and said it changed notices to reflect actual pricing changes.
• In court filings, RACQ denies the notices were misleading and argues customers would have understood the context of the “last period premium”.
• ASIC disputes that customers should be expected to remember or cross-check earlier paperwork to interpret a renewal notice.
• Documents indicate roughly 70 per cent of the renewal certificates in question had a comparison premium higher than what was truly paid; RACQ says most differences were under $200.

What remains unresolved

The legal fight highlights a tension that often arises in consumer communications: whether information is technically defensible in context, or whether it is clear and accurate in the way most recipients would naturally read it. RACQ’s defence relies on the idea that customers would remember the earlier quote and any later adjustments. ASIC’s position is that renewal notices should not require that kind of reconstruction, and that the “last period premium” label and presentation did not make the necessary clarifications.

RACQ has already changed its approach to renewal notices, but the court proceedings will determine whether the earlier documents were misleading as ASIC alleges, and how the law applies to the way premium comparisons were framed over the period in question.