WA motoring club RAC Group has reported an increased net profit for the past financial year, including a stronger insurance contribution. 

Profit rose 13% to $288.2 million in the year ended June 30, while the insurance service result increased to $420.2 million from $290.3 million. 

Insurance revenue rose to $1.53 billion from $1.45 billion driven by growth in home and motor policies issued, increases in amounts insured, and average premium price increases. 

The result benefited from lower claims costs resulting from lower attritional frequency – defined as the number of claims as a proportion of the total number of policies issued – and benign weather conditions.  

Amounts recoverable from reinsurers increased due to a storm event at the end of May. 

RAC paid out $900 million across more than 217,000 claims during the year, including 12,000 from a storm late in the year that hit Perth and the south wes,t in the insurer’s largest event since a 2010 hailstorm. 

The annual report was completed ahead of the ACCC decision to block IAG’s acquisition of its insurance underwriting business. RAC has since supported IAG’s move to make a public benefits test application to the regulator. 

Group CEO Rob Slocombe and President John Driscoll say in the annual report that the club, which has 1.3 million members, insures $270 billion worth of WA homes, vehicles and other assets. 

“While that reflects the trust members place in RAC, it also creates a concentration risk that larger, national insurers avoid by spreading their exposure across multiple states and markets,” they say.

“At the same time, the insurance environment is becoming increasingly complex. Rising weather- related risks, increasing costs and regulatory requirements, and the growing need for capital and scale are creating significant challenges.” 

They say that under the proposal, IAG would take on the insurance risk and underwriting, and claims handling, while RAC Insurance would remain and members would continue to deal with local people, branches, claims teams, and call centres.