RACQ has suffered a massive spike in complaints as premiums as much as triple and insurance claims are mishandled so badly that one customer was robbed by the insurer's repair contractors.
A 30 per cent rise in complaints was internally recorded as a fail, according to accounts published for RACQ, one of Queensland's highest profile organisations, with 1.7 million members.
"RACQ has … lost the plot," long-term customer John Monks told the ABC.
Mr Monk plans to leave RACQ after his premium quotes more than doubled last year.
RACQ customer John Monks says he’s been upset with price increases. (ABC News: Steve Keen)
Yet RACQ, which also has a long-running roadside assistance division, also receives high praise in some areas. It says satisfaction scores for home insurance claims are 87.8 per cent.
RACQ chief executive David Carter said the company is improving how it handles claims and manages risk, and that premiums had not changed much for many households.
"We don't want to put premiums up on anyone … because people are doing things tough," he told the ABC.
'Dysfunctional' processes
Some complaints reflect industry-wide issues, but RACQ is also notching some outsized problems after several recent blow-ups:
- A federal regulator publicly rebuked RACQ's "immature" risk culture
- A former chief risk officer sued after his dismissal claimed insurance claims processes were dysfunctional
RACQ was formed in 1905 — when there fewer than 50 cars in Queensland. One of its first moves was to ask police to stop young people throwing rocks at vehicles, according to RACQ history.
It has since expanded with blue and gold livery emblazoned across its fleet of car repair vehicles, a rescue helicopter and insurance policies. It's a customer-owned "mutual" organisation — the business sector that prides itself on not using profits to pay shareholder dividends.
Still, it must generate vital capital via profits. It says home insurance lost money on underwriting last year, while car insurance made a profit. After investment gains and some one-off factors, the insurance division's profits were $74.4 million.
'Perils' pricing
Mr Monks is a gold card-carrying RACQ member. A grey cat prowls the beautiful tile-floored Gold Coast home he bought in the 1990s. The interior is bedecked with family photos.
He says the home, backed against a canal, has never flooded.
In November 2023, his home insurance premium more than doubled to nearly $7,000.
Yet the premium for his other Moreton Bay island property did not rise that much. After complaining, Mr Monks says his home premium was reduced to $5,012.13.
He has swapped to another insurer for three cars, saving almost $1,000.
"I won't go back … I've got a far better deal with far better service and far more pleasant people," he said.
Insurers more broadly have cranked pricing in recent years to cope with construction inflation and disasters, including floods that left south-east Queensland homes inundated and mud-lined in 2022.
Homes across south-east Queensland were inundated with floodwater in 2022. (ABC News: Michael Lloyd)
But RACQ's latest accounts show an additional twist: adopting new "risk-based perils pricing".
Mr Carter said RACQ has new granular data about floods and storm perils.
With this data about high-risk areas, the insurer is now pricing for disasters down to an individual address.
This affects about 12 per cent of RACQ's customers.
Mr Carter said RACQ has capped increases and is still not charging what it technically should to cover some risks. That means increases might continue for some households over several years.
David Carter says RACQ wants the best outcome for its members. (ABC News: Curtis Rodda)
But he added RACQ can sometimes price below other insurers – one had quoted $19,000 to a person, who shifted to RACQ on a $9,000 premium.
Still, RACQ's price jumps have fuelled a widespread backlash.
RACQ copped a 30 per cent complaint increase to 35,872 in the 12 months to June.
Suncorp, its biggest rival, had a 13 per cent rise across Australia, according to accounts.
RACQ blamed its complaint rise on premium increases and difficulties "consistently meeting" customers' expectations for claims.
RACQ is Queensland's largest club and offers roadside assistance, insurance, banking and travel services. (ABC News)
Theft and mould
Some grievances have progressed to the Australian Financial Complaints Authority.
Three quarters of AFCA complaints are resolved in RACQ's favour, which Mr Carter said showed industry needed to clearly set reasonable expectations about claims.
Yet some decisions against RACQ stand out.
Take one from this February where a storm had damaged a policyholder's home in December 2022 — AFCA determined mould was caused by the storm and the insurer's roof repairs were "defective".
It got worse.
"Several employers of the contractor initially appointed have since been convicted of theft of property from the complainant's home during the repair process."
AFCA found it unsatisfactory RACQ did not assess mould damage until six months after it was first made aware. (ABC News)
"That should never have happened in a claim, that was really disappointing," Mr Carter said about the complaint.
In another May ruling, a customer had alerted RACQ to roof mould problems in October 2022, after earlier hailstorm repairs.
"The insurer did not assess the mould damage until 5 April 2023. I consider this unsatisfactory," AFCA said.
Claims Hero, which makes money acting for claimants, argued mould-related insurance claims typically became problematic when there were delays.
Claims Hero managing director Luke Dugdell said adjudications referring to delays indicated systemic problems in RACQ.
Mr Carter rejected this, saying RACQ took mould "very seriously" and mould complaints going to AFCA was a low proportion of all such claims.
RACQ has also failed to meet initial deadlines in 40.3 per cent of AFCA complaints between July 2022 and June 2023, and 20.6 per cent in the six months to December 2023. This compares unfavourably to its major rivals.
"If you're not meeting deadlines with the ombudsman, you've got problems with your processes and procedures – that is like kindergarten stuff that needs to be addressed," Hunter Green Institutional Broking director Charlie Green told the ABC.
Mr Carter said RACQ was fixing these problems.
Some customers are fed up.
Andrew Withers from Coes Creek, near Nambour, was dissatisfied with RACQ's repair options after his car was damaged.
Long-term RACQ customer Andrew Withers says he is unhappy with repairs and price rises. (Supplied)
Then his home premiums in June rose from $1,529 to $2,701.
He said RACQ told him his claims did not affect the price, so he has no idea why it rose.
He managed to knock off about $110 by reducing the value of his home contents.
But Mr Withers questioned whether loyal customers would stick with the brand.
"You're targeting the people who can afford it but have been frugal all their life to reach that point," he said.
"There's a point when anyone says enough's enough."
Some deeper RACQ concerns erupted earlier.
A 2021 lawsuit from former RACQ chief risk officer Mark Baxter alleged he had warned of multiple problems, including a "dysfunctional" claims process.
He also alleged having warned that RACQ had a "complete disregard" for compliance obligations.
Mr Baxter sued RACQ after being dismissed about six months into the job.
The matter was settled out of court.
RACQ has previously said a fundamental difference in views existed on "how to get things done" and that it had always worked above minimum compliance requirements.
Mr Carter maintained RACQ had been working on improving claims handling.
Other former insiders have said there is a tension between some compliance areas and the insurance arm.
Some questioned if RACQ's move into banking in 2017 had become a distraction.
By October 2022, RACQ copped a rare public blast from the government watchdog, the Australian Prudential Regulation Authority (APRA).
"Areas of concern include RACQ's risk and compliance framework and practices, capability and capacity challenges within the risk functions, unclear accountabilities and an immature risk culture," APRA said.
'Never again'
Bev Young is another gold card-carrying customer who left RACQ insurance after her home contents quote more than tripled to $1,029.
An RACQ letter referred to "geo-coding software … risk-based pricing model" and hinted at flood concerns generally — but did not specify risks for her home at Sandstone Point near Bribie Island, north of Brisbane.
She's asked multiple times for an explanation, but said it was still unclear why her premiums increased.
"I will never insure with RACQ ever again," she said.
Bev Young quit her contents cover with RACQ after the quotes more than tripled.
Industry insiders are speculating that RACQ could sell its insurance arm or get more help from other insurance companies to cover risk.
It's already exited from compulsory third-party insurance, saying the returns were inadequate.
Hunter Green's Mr Green said RACQ's smaller size — compared with rivals such as Suncorp — made it harder to be competitive.
"For RACQ, they're good people but they're hampered by a lack of scale," he said.
Mr Carter said RACQ would consider ways to partner with others.
"If there's a better way of doing [insurance] we will go there, because it's the best outcome for members," he said.
He disputed the suggestion that the strain of accumulated events, such as governance criticisms, had overwhelmed RACQ.
Mr Carter said many issues had been dealt with and some external factors, like construction costs and workforce shortages, had affected claims handling.
He maintained that RACQ offered good value.
"We have to do more work … particularly when [claims] become more complex," and to explain price increases, he said.