RACQ disputes ASIC allegations over renewal notices as court fight tests what customers understood
A dispute over what a renewal notice communicates
RACQ is defending the way it presented premium comparisons in insurance renewal notices, arguing that the documents were not misleading and that customers were not tricked by the figures shown. The stance is set out in Federal Court defence filings, after the Australian Securities and Investments Commission (ASIC) launched legal action over renewal certificates issued across a range of insurance products.
The case centres on a specific comparison used in renewal notices: an upcoming premium for the next period set against a “last period premium”. ASIC alleges that in hundreds of thousands of instances this “last period premium” did not reflect the amount the customer actually paid, potentially affecting how customers perceived price changes at renewal time.
RACQ’s position is that, regardless of what was listed as the comparison figure, the price charged to customers “at all times was correct”. ASIC, however, is challenging whether the notices themselves created a misleading impression about the size of premium increases and whether that could have influenced consumer decisions.
ASIC’s claim: more than 434,000 renewal certificates in scope
ASIC’s lawsuit 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 actual amount paid by the customer. The renewal notices covered multiple product lines, including home, boat and pet insurance.
The allegations focus on the way the notices compared the new premium against a prior-period figure that could be higher than the customer’s final paid premium. According to the description in the case material, the “last period premium” could exclude adjustments such as discounts that were agreed after an initial quote.
ASIC’s case also points to customer feedback over time. The regulator alleges that customers had complained to the insurer since 2019 that the comparison was “very misleading”.
RACQ’s earlier apology and subsequent legal defence
When the regulator’s concerns became public, RACQ issued an emphatic apology and said it had stopped the practice. It stated at the time: “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.”
That public messaging acknowledged that the approach did not meet the organisation’s expectations for member communications. However, the court filings now show RACQ formally disputing the central allegation that the renewal notices were misleading. In the defence documents, the organisation downplays the idea that the difference between the comparison figure and the amount paid manipulated customer behaviour.
RACQ has also framed its court response as part of the normal legal process, stating: “We are required to respond to ASIC’s statement of claim as part of the legal process.”
How the “last period premium” could differ from what was paid
The dispute turns on a practical feature of insurance pricing: a customer may receive an initial premium quote and later secure changes to that price, such as a discount negotiated after the quote was first issued. ASIC alleges that renewal notices compared the upcoming premium against a “last period premium” that could represent the earlier, undiscounted amount rather than the final amount actually paid.
In other words, the renewal notice could show a comparison that made the upcoming premium appear closer to the prior year’s price than it truly was. If the “last period premium” was higher than the paid premium, the percentage increase implied by the comparison might look smaller than the real increase from what the customer paid.
RACQ’s position is that customers would have understood the context, because they were aware of the initial quote and any subsequent changes. ASIC’s position is that the renewal notice did not explain that the “last period premium” had been adjusted, and that customers could not reasonably be expected to remember earlier paperwork or cross-check it against the renewal document.
A customer example illustrates the competing interpretations
One example cited in the reporting around the case involves a 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” of $7,033.57. On the face of the renewal notice, that comparison suggests an increase of about 1.5 per cent.
But the information associated with the case indicates that Mr Monks had negotiated a discount and paid $5,024.18 in the previous year. On that basis, the change from what he actually paid to the renewal premium would be far larger: a 39.9 per cent increase.
This example captures the core question before the court: whether the renewal notice would lead an “ordinary and reasonable” customer to believe the “last period premium” figure represented what they paid, or whether customers would understand it as a reference to an earlier stage of pricing that may have been adjusted.
RACQ’s argument: customers knew the quote and any adjustments
In its defence, RACQ rejects ASIC’s allegation that the average policyholder would have believed the “last period premium” was the amount actually paid. The insurer argues that policyholders had known the initial premium quote, would have been aware of any later changes to that quote, and would have known why they sought a change.
That context, RACQ contends, means an “ordinary and reasonable policyholder” would have understood what the “last period premium” referred to when reading the renewal notice.
ASIC, in its legal reply, rejects that framing. It argues the renewal notices did not clarify that the “last period premium” had been subject to adjustments, and that even if a customer had received earlier paperwork, they could not reasonably be expected to remember the details or cross-reference them with the figure presented at renewal time.
What the case suggests about consumer decision-making
ASIC’s allegations include the concern that customers may have missed opportunities to shop around if the renewal notice did not provide an accurate comparison to what they actually paid. The implication is that a customer who believes their premium has only risen slightly may be less likely to seek alternative quotes than a customer who understands the increase is substantial.
RACQ’s defence seeks to blunt that point by arguing that renewal rates were not materially different between unaffected and affected customers. That is, the insurer suggests the disputed comparison format did not meaningfully change whether people renewed.
Even so, the legal dispute is not only about whether renewal rates changed. It is also about what the renewal notices conveyed and whether the presentation of a comparison figure met legal expectations for clarity and accuracy in consumer communications.
The scale of the differences: many were under $200, RACQ says
The court documents indicate that roughly 70 per cent of the 434,548 renewal certificates had a comparison premium that was higher than what people had truly paid. RACQ also states that, in a majority of the affected certificates, the difference between the amount customers actually paid and what they were told was the “last period premium” was less than $200.
Those figures add nuance to the dispute. On one hand, ASIC’s case is framed around a large number of renewal certificates and the principle that the comparison did not match the paid premium. On the other, RACQ points to the size of the differences in many cases, suggesting the gap was often relatively small in dollar terms.
However, the example involving a much larger percentage increase highlights why the issue may matter to customers even when the mechanics of pricing adjustments are common in insurance. The legal question remains whether the notice format, as presented, could mislead customers about the true change from last year’s paid amount to the new premium.
Changes to notices and the continuing court battle
RACQ has said it changed renewal notices so they now reflect actual pricing changes. That step followed the public emergence of the issue and the regulator’s action. The organisation’s earlier apology and the cessation of the practice are part of the timeline, but they do not resolve the legal arguments now being tested in court filings.
ASIC’s case and RACQ’s defence set up a direct contest over consumer interpretation: whether customers reading a renewal notice would take “last period premium” to mean “what I paid last year”, or whether they would understand it as a reference figure that might differ from the final amount paid after adjustments.
The dispute also highlights the tension between internal pricing processes—where quotes can change and discounts may be negotiated—and the need for renewal documents to communicate clearly to customers who may not recall prior paperwork or the sequence of adjustments made months earlier.
Key points at the centre of the proceedings
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 an upcoming premium against a “last period premium” that could exclude discounts agreed after an initial quote.
RACQ says the price charged to customers “at all times was correct”, and denies the notices were misleading.
RACQ argues an “ordinary and reasonable policyholder” would have understood the context because they knew the initial quote and any subsequent changes.
ASIC argues the notices did not clarify the “last period premium” had been adjusted and customers could not reasonably be expected to remember or cross-check earlier documents.
Documents indicate roughly 70 per cent of the certificates had a comparison premium higher than what was paid; RACQ says most differences were under $200.
RACQ says renewal rates were not materially different between unaffected and affected customers, disputing claims about behavioural impact.
Why the language in renewal notices matters
Renewal time is a critical moment for insurance customers. The renewal notice is often the primary document a customer uses to decide whether to accept the next period’s premium or to seek alternatives. In that context, a comparison figure labelled “last period premium” carries an intuitive meaning for many people: the amount they paid previously.
RACQ’s defence relies on the idea that customers would interpret that figure through the lens of their earlier interactions—initial quotes, later adjustments, and the reasons they sought changes. ASIC’s reply relies on the opposite assumption: that customers should not be expected to reconstruct the history of a policy’s pricing when reading a renewal notice, and that the notice should clearly identify when a comparison figure differs from the amount paid.
The court filings show that the case is not only about numbers, but about how those numbers are presented and understood. It raises a broader question about consumer communications in insurance: when an insurer uses a reference figure for comparison, how explicit must it be about what that figure represents?
Where things stand
RACQ has publicly acknowledged the issue and changed its renewal notice approach, while simultaneously contesting ASIC’s claim that the earlier notices were misleading. ASIC maintains that the notices did not adequately explain that the “last period premium” could differ from what the customer paid, and that this could affect customer understanding at renewal.
As the Federal Court matter proceeds, the competing arguments will test how an “ordinary and reasonable” policyholder is expected to read a renewal notice, what context they can be assumed to remember, and what level of clarity is required when comparing premiums across policy periods.