RACQ Insurance Limited (RACQ), has been ordered to pay a $10 million penalty by the Federal Court for potentially misleading customers in its product disclosure statements (PDS) about the pricing discounts available for certain types of insurance cover.

The Court found that RACQ sent out the misleading PDSs on at least 5 million occasions between March 2017 and March 2022. Approximately 458,746 customers missed out on approximately $86,476,339 in discounts they should have received.

ASIC Deputy Chair Sarah Court said, ‘Consumers need to be able to rely on the pricing promises made to them by insurers, and insurers need to make sure that they pass on those promises in full.

‘ASIC identified pricing promises in insurance as an enforcement priority this year, and will continue to monitor marketing and pricing practices in the industry, and use the full range of regulatory tools available to protect consumers from general insurers failing to honour promised discounts.’

The PDSs for RACQ’s Motor, Home, Caravan & Trailer and Unique Vehicle insurance policies included statements that certain discounts would be applied to customers’ insurance premiums.

The Court found that these statements were potentially misleading because the discounts were only applied by RACQ to the base insurance premium, not to additional premiums paid for certain optional extras.

‘ASIC brought this case in February 2023. We are pleased it has reached a conclusion within a year, with a significant penalty handed down and a clear message to the insurance industry that failures in pricing practices will not be tolerated’ concluded Ms Court.

RACQ admitted to the contraventions and the parties jointly submitted that the penalty sought by ASIC was appropriate.

RACQ was also ordered to pay ASIC’s costs of the proceedings.