ACCC Emphasizes Importance of “Actual” Past Premium in Renewal Notices
The Australian Competition and Consumer Commission (ACCC) has reiterated that the premium amount consumers actually paid in the previous year is the most relevant figure for renewal notices, urging insurance companies to disclose this information clearly.
“We believe that, from a consumer perspective, the amount paid last year is the appropriate figure to disclose,” an ACCC spokesperson explained to insuranceNEWS.com.au. “While initial quotes may vary due to discounts or adjustments, consumers need to see the final bill amount for transparency.”
The importance of this recommendation was underscored following an ABC report, which revealed a case where an RACQ Insurance renewal notice showed an earlier premium amount before discounts, leading to confusion. The renewal premium was only up by 1.5% from the initial quoted amount, yet it reflected a 39% increase compared to what was actually paid by the consumer.
The ACCC initially recommended this clearer disclosure during its Northern Australia insurance inquiry, noting that many consumers were unaware of their final paid premium. Alongside this, the ACCC has also advocated for including the previous insured amount and any excess, ensuring that consumers have a full understanding of their policy and the factors affecting pricing.
The Federal Government, however, has not yet formally responded to these recommendations, which were included in both an interim report and the final report delivered in late 2020.
The Insurance Council of Australia (ICA) states that the current industry code mandates disclosure of the previous year’s premium alongside the new offer. However, the ICA notes that this figure may not include adjustments or discounts applied during the policy’s term or at the point of payment.
RACQ Insurance commented that it has not previously received complaints regarding unclear communications on this issue, adding that policyholders can call or visit a branch if they need additional information. “We are open to reviewing this feedback to see how we might further clarify our messaging,” an RACQ spokesperson said.
Meanwhile, the Australian Securities and Investments Commission (ASIC) is set to review renewal disclosures and examine industry practices to ensure clarity for consumers.
CEO of the Consumer Action Law Centre, Stephanie Tonkin, expressed concern, saying that any misleading practices around actual savings and pricing are troubling, especially given the current cost-of-living crisis. “We haven’t received direct complaints about this practice on our helplines, but misleading representations of actual costs—similar to tactics under scrutiny in the supermarket sector—are certainly worrying,” she said.
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