The Australian Securities and Investments Commission will examine the way year-earlier comparison premiums are disclosed in renewal notices. 

An ABC report last week highlighted an RACQ Insurance renewal quoting the year-earlier premium before a discount was negotiated. The renewal premium was up 1.5% on the original stated figure, compared with a 39% jump versus the sum actually paid.

ASIC deputy chair Sarah Court says in the report that customers should be able to take a renewal notice at “face value” and the regulator will examine industry practices and documentation.

“As the deputy chair said to the ABC in that article, it is an issue we will consider. We don’t have anything to add to the deputy chair’s comments to the ABC,” a spokesperson told insuranceNEWS.com.au.

RACQ said the renewal notices included a comparison between the original premium offered a year earlier and the price offered this year, and did not include subsequent adjustments such as changes to sum insured, excess levels and other items.

A “why does your premium change” section below the price comparison explained elements of premium movement and referred policyholders to the website for further information.

“We have not previously received any feedback that our communication has been an issue for our members,” a spokesperson told insuranceNEWS.com.au. “Typically, members will call or visit us in store if they need clarification. We will, however, be reviewing this feedback to identify any opportunities to further clarify our messaging for members.”

CEO of Consumer Action Law Centre Stephanie Tonkin says anything that misleads consumers over pricing is "concerning".

"We haven't heard of this practice directly from the people who call our helplines, but any misleading representation of actual savings and prices – similar to the kind of strategies supermarkets are being criticised for – is concerning, especially in the midst of a cost-of-living crisis," she told insuranceNEWS.com.au.

The Australian Competition and Consumer Commission’s northern Australia inquiry 2018 interim report recommended insurers disclose the previous year’s premium on renewal notices. The 2020 general insurance code of practice introduced a requirement to provide a comparison “between this year and last year’s premium” and explain how it is calculated.