WA motoring group RAC has confirmed a strategic review of its insurance business is under way as it looks to improve services for members.

Queensland’s RACQ last week announced an $855 million insurance equity sale and long-term distribution agreement with IAG, while SA motoring group RAA has struck a similar $642 million deal with Allianz.

“A strategic review of RAC Insurance is under way. We conduct these types of reviews from time to time across all aspects of our organisation,” a spokesperson told insuranceNEWS.com.au.

“RAC is constantly looking for ways to improve our member experience and the services we provide, including insurance. Due to the confidential nature of these types of reviews, we will not be commenting further.”

The Australian Financial Review said in its StreetTalk column today that it understood RAC had appointed Barrenjoey to run a strategic review of its insurance arm.

RAC’s annual report shows the group has more than 1.3 million members and is represented in more than 60% of WA homes.

It had insurance revenue of $1.2 billion, an insurance service result of $116.9 million and paid $849 million in claims in the year to June 30.

Group CEO Rob Slocombe and president Allan Blagaich say in the annual report they recognise the impact of premium increases on members.

“High supply chain inflation compounded with previous increases to reinsurance placed significant pressure on the operating costs of our insurance business, which led to rising premiums,” they said.

“Claims expenses highlight the changing costs associated with insurance. Compared to three years ago, the volume of insurance claims received has increased by 28%, while the overall cost of claims in the same period has increased by 81%.”

Broader indicators point to major weather events becoming more frequent and extreme, and the assets they damage continuing to be more expensive to repair and replace, they say.