The Royal Automobile Club of Queensland (RACQ) has apologised to customers after acknowledging serious errors in insurance renewal notices that have prompted legal action from Australia’s corporate regulator, even as the member-owned group embarks on a sweeping transformation of its insurance business.
At its annual general meeting this week, RACQ chief executive David Carter issued a public apology following revelations that more than half a million renewal notices sent to policyholders contained misleading or inaccurate pricing information.
“To you, and all our members — I’m sorry,” Mr Carter told attendees. “This matter is certainly not in line with our high standards or the experience we strive to offer.”
The organisation, which provides insurance and roadside services to 1.7 million members, now faces a Federal Court case brought by the Australian Securities and Investments Commission (ASIC), which alleges the renewal letters failed to provide accurate price comparisons between existing and new premiums.
The alleged breaches stem from RACQ’s practice of comparing renewal offers against a “last period premium” — a figure that did not always reflect what customers actually paid, particularly where discounts had later been negotiated.
In one example cited by ASIC, a renewal notice stated that a policyholder’s previous premium was $6,930.55 and their new offer $7,033.57 — a rise of 1.5 per cent. In reality, after discounts, the customer had paid only $5,024.18 the prior year, meaning the increase was closer to 40 per cent.
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“The limitations of the comparison price shown should have been explained on the renewal notice,” Mr Carter told the meeting. He confirmed the company had overhauled its systems and letter templates and was working with ASIC to resolve the matter, which remains before the court.
“It was wrong, we reported it, and the consequences are the consequences,” he told the ABC.
The company, he added, would not seek to have any penalty costs covered by commercial insurance protection.
RACQ has seen a rise in customer complaints amid escalating premiums and what some members describe as inconsistent handling of claims. ASIC’s case, launched in September, alleges that concerns were raised within RACQ as early as 2019 when the comparison pricing feature was introduced. Some complaints reportedly reached senior executives but were not escalated to internal committees until late 2023, after journalists began asking questions.
Mr Carter conceded that feedback “got escalated to a fairly senior level” years ago but said the organisation had been unable to determine what action, if any, was taken at the time.
“What we can’t identify is what happened with the information,” he said. “So what we can’t see is what decision got made with the escalation.”
He said RACQ was strengthening internal risk processes to improve its responsiveness and culture. “When things get raised, someone takes action,” he said, adding that new technology systems would assist in detecting patterns within complaints data.
The controversy comes at a pivotal moment for RACQ’s insurance operations. In 2024, the organisation sold 90 per cent of its underwriting business to Insurance Australia Group (IAG) for about A$855 million, retaining a minority share and its member-facing brand.
The sale, approved by competition authorities earlier this year, transfers underwriting, pricing, and claims responsibilities to IAG while allowing RACQ to focus on customer engagement and distribution. The alliance brings the Queensland mutual into the orbit of Australia’s largest general insurer, a move Mr Carter described as “a new era for how RACQ supports Queenslanders with their insurance needs.”
The shift follows several difficult years for RACQ Insurance, which posted a A$236 million loss before rebounding to a A$31.9 million profit in FY 23. The insurer has also faced rising catastrophe losses from floods and storms, and a $10 million fine in an earlier ASIC case concerning discount disclosure.
The ASIC litigation against RACQ — coupled with parallel action against IAG over similar conduct — underscores the regulator’s heightened focus on transparency and pricing accuracy in consumer insurance. It also highlights the growing compliance pressures facing mutual and customer-owned insurers as they modernise operations and partner with larger corporates.
For the industry, RACQ’s experience offers a cautionary tale about governance lapses and system complexity in a period of digital transition. The case also reflects a broader regulatory trend in Australia: the enforcement of consumer-protection standards once seen as administrative now carrying the weight of courtroom scrutiny.
Mr Carter told members that RACQ’s commitment to rectifying the issue was absolute. “This matter is certainly not in line with our high standards,” he reiterated. The insurer has pledged to work “collaboratively” with ASIC to reach a resolution and to strengthen its oversight mechanisms.
RACQ, long a fixture of Queensland life with its bright yellow roadside vans and community ethos, now finds itself navigating not only a reputational challenge but also the realities of a modernised, data-driven insurance model under shared ownership.
Whether the organisation can reconcile its member-owned heritage with the rigours of corporate accountability and regulatory oversight may determine the success of its “new era” in insurance.
