RACQ Insurance has apologised for a renewal notice transparency failure that has led the corporate regulator to launch Federal Court action alleging false or misleading representations.

The insurer says it self-reported to the Australian Securities and Investments Commission late last year after a media enquiry, and it has been working with the regulator while holding its own review covering the period since a renewal comparison price was introduced.

For most policyholders, the comparison prices would have shown the amount they previously paid, but where members made changes to their policies at renewal or during the year, these changes were not reflected in their comparison price.

“We are disappointed this has happened and apologise to our members, as this is not in keeping with our high standards or the experience we strive to offer,” RACQ says in a statement.

“As part of our ongoing risk transformation program, our priority is to continue to uplift our risk management practices, processes and systems. We acknowledge ASIC’s proceedings and will be working through this process to finalise the matter.”

ASIC says the insurer sent more than 570,000 renewal documents between September 2019 and December last year on which the previous-period premium shown was not the actual figure. 

Often the actual figure was lower due to changes made after the initial quotation, meaning the premium increase on renewal was larger than indicated. 

The regulator says that as early as September 2019 the insurer received a first customer complaint about the comparison being misleading. 

“RACQ received further complaints from customers during the relevant period, including a complaint made to the acting CEO of RACQ in 2019 and complaints via external bodies such as the Australian Financial Complaints Authority,” ASIC says in court documents. 

It alleges the pricing representations did not achieve promised transparency and deprived customers of the ability to properly consider the value of their policies compared with other options in the market. 

“RACQ’s conduct undermines pricing transparency and the integrity of its customers’ decision-making. It damages consumer confidence in the insurance renewal process specifically, and the insurance industry generally,” ASIC says. 

The insurer says it takes it obligations and responsibilities seriously and has updated its system and renewal policies. 

RACQ Insurance has since been acquired by IAG in a deal completed on September 1.