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Speaker 1: But you will have heard on five double A News

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Speaker 1: this morning some two hundred thousand former and current RAA

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Speaker 1: members are in line for a refund. The payouts follow

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Speaker 1: an inquiry into some questionable insurance pricing promises. The average

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Speaker 1: payout about one hundred and twenty five dollars, some will

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Speaker 1: receive hundreds of dollars, and that the RAA is contacting

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Speaker 1: everyone who's in line for a refund. Got a text

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Speaker 1: from somebody this morning saying just in regards to the amount,

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Speaker 1: now where's it gone? Just saying that they have two

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Speaker 1: thousand dollars back from the RAA. And it's a nice

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Speaker 1: little pre Christmas gift. According to the email that has

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Speaker 1: come through here, it is nice little Christmas boost from Marion.

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Speaker 1: Thank you Marian for that. I'm sure you're welcoming the refund.

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Speaker 1: Tara Page, your CEO RAA Insurance Tara, Good morning, Hi Matthew.

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Speaker 1: How did this come about? How did you make this

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Speaker 1: up so badly?

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Speaker 2: Yeah, so, Matthew, about a year or two ago at

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Speaker 2: which our insurance regular regulator actually undertook an investigation and

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Speaker 2: directed eleven of the largest insurance across the across the

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Speaker 2: country to conduct a review of their pricing promises. As

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Speaker 2: this was going on, although we were not part of

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Speaker 2: that review, decided that we would conduct a review with

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Speaker 2: a similar scope, and through that review identified that some

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Speaker 2: of our advertising materials over the past, you know, sort

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Speaker 2: of since we have had our insurance business, were perhaps

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Speaker 2: not as clear as they could have been, and so

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Speaker 2: they were somewhat inconsistent with our product disclosure statements in

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Speaker 2: the way they talked about how we applied discounts. So

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Speaker 2: what we've done is go back over all of our

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Speaker 2: policies right back to twenty twelve and identified where if

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Speaker 2: you read the advertising you might have thought you were

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Speaker 2: getting a discount stay on your optional cover. We've applied

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Speaker 2: those discounts and now we're looking to remediate and pay

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Speaker 2: that money back to our members.

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Speaker 1: All right, So now members who are not yet they

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Speaker 1: haven't heard from you yet, can they expect to still?

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Speaker 1: How are you getting in touch with people who may

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Speaker 1: not have a policy today with you, but did have

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Speaker 1: two three four years ago.

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Speaker 2: Yeah, So we are currently going using the details that

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Speaker 2: we have on file. If that's unsuccessful, we've got a

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Speaker 2: number of strategies in place to try to make contact

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Speaker 2: with those people and once we get to that group,

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Speaker 2: we'll also you know, people can call in to check

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Speaker 2: if they are entitled to some form of remediation. Right now,

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Speaker 2: we're focusing on getting that money back to our current

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Speaker 2: members as quickly as possible, and we'll shortly been moving

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Speaker 2: into our previous members.

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Speaker 1: Have people been ripped off in this process because they

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Speaker 1: would they would say they have been, of course, yeah.

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Speaker 2: Which is why we're providing that money back. Our advertising

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Speaker 2: material wasn't as clear as it should have been in

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Speaker 2: terms of describing how we apply our discounts, and so

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Speaker 2: that's why we're repaying everyone, and we're repaying with interest.

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Speaker 1: Okay, well that's positive. Where's that money coming from? The

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Speaker 1: repayment money? I mean, this is money you would have

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Speaker 1: received spent on claims, spent on wages and bills and

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Speaker 1: everything else. So we're getting the money to repay people

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Speaker 1: back millions of dollars now.

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Speaker 2: Yeah, So as an insurer, we're required to keep a

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Speaker 2: certain amount of capital to the side and to ensure

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Speaker 2: that we're sustainable for the longer term. So we've used

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Speaker 2: that capital, and we are using that capital to make

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Speaker 2: those repayments.

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Speaker 1: Okay. Asek has called on general insurance providers to reduce

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Speaker 1: the complexity of policies. Is that something you're taking on

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Speaker 1: board as well.

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Speaker 2: Absolutely, We're constantly looking at ways that we can improve

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Speaker 2: our policies and reduce the complexity.

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Speaker 3: Is it is a real.

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Speaker 2: Challenge and I see on the Insurance Council of Australia

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Speaker 2: and it's one of those topics that we regularly discussed

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Speaker 2: in that forum.

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Speaker 1: The promise is made in the marketing material. What were

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Speaker 1: they I mean, what did you say that was wrong?

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Speaker 2: Yeah, so I think we're probably a little bit too

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Speaker 2: general in the way we tried to describe our discounts

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Speaker 2: on our website. So for example, we would have described

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Speaker 2: getting ten percent off of your policy or ten percent

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Speaker 2: off of your premium, when in fact the ten percent

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Speaker 2: applies at a base premium level only. So our product

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Speaker 2: disclosure statement references that discounts are applied to the base

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Speaker 2: premium and not to optional covers. But our website was

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Speaker 2: a little bit too generic, okay?

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Speaker 1: Was that in the fine print though? That it was different?

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Speaker 1: Like so when somebody went through and applied no evidence

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Speaker 1: as to where it was coming off.

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Speaker 2: It was in our product disclosure statement, in the terms

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Speaker 2: and conditions, but then on our website it was just

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Speaker 2: simply described off the policy. So we've updated our website

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Speaker 2: details to confirm that that it doesn't apply to optional

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Speaker 2: covers and also at times there is a minimum premium

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Speaker 2: which might apply.

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Speaker 1: Yeah, all right, so and no one reads the t's

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Speaker 1: and c's, let's be real about that, or not.

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Speaker 2: Many We would like it.

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Speaker 3: You know.

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Speaker 2: We encourage and try to make our product closure statements

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Speaker 2: as simple as possible so that people.

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Speaker 3: Can read through them.

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Speaker 2: But yeah, it is a challenge to get people to

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Speaker 2: read the fine print.

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Speaker 1: You wouldn't be the only insurance company caught up in this,

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Speaker 1: I dare say there are others. I imagine you'd want

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Speaker 1: them to do the same thing. Follow your lead.

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Speaker 3: Absolutely.

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Speaker 2: In fact, this has been an industry wide issue for

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Speaker 2: the past two or three years, and you know, some

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Speaker 2: other insurance have had to pay well over two hundred

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Speaker 2: million in remediation and received fines from the regulator for that.

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Speaker 3: We're not in that position.

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Speaker 2: And you know, I think all everyone across the insurance

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Speaker 2: industry understands importance of making sure that.

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Speaker 3: We have good processes in place so.

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Speaker 2: That when we advertise discounts that we're actually making sure

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Speaker 2: that they make their way through to the customer in

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Speaker 2: the long term. I think also it's similar to what

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Speaker 2: has occurred over many industries. I think you know over

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Speaker 2: the last ten years, we've seen it happen across the

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Speaker 2: internet providers and phone companies. Being really clear on what

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Speaker 2: we mean when we're describing pricing promises.

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Speaker 1: Okay, does this mean the changes now? Are we likely

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Speaker 1: to see premiums come down at all as a result

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Speaker 1: of this?

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Speaker 2: This is not connected to premiums in terms of how

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Speaker 2: we calculate our premiums for policies.

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Speaker 3: So there's broader issues which are impacting premiums.

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Speaker 2: We're seeing a lot of inflation in our supply chain. Still,

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Speaker 2: COVID provided quite a bit of an upset to the industry,

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Speaker 2: both in terms of changing the value of cars, changing

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Speaker 2: increasing the spare part prices, all those sorts of things,

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Speaker 2: and we're still trying to find that new normal following COVID.

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Speaker 2: But I can assure you we are really focused on

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Speaker 2: trying to make our policies as affordable as possible for

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Speaker 2: our members, and so that means both looking at what

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Speaker 2: we can do across that supply chain to keep the

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Speaker 2: cost down so that they don't flow through to premiums.

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Speaker 2: But there are some things which are out of our

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Speaker 2: control and they are industry issues which again in my

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Speaker 2: role with the Insurance Council, it's a constant conversation for us.

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Speaker 2: How can we make sure that insurance products remain affordable

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Speaker 2: and accessible to everyone.

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Speaker 1: Tara Jilla's texted in. She says, can you tell us

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Speaker 1: when we'll hear from you? I've been with RAA for

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Speaker 1: over fifty years for all my insurance, so can you'll

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Speaker 1: expect to get a letter?

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Speaker 2: It will depend on exactly what types of insurance you've had,

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Speaker 2: and whether she's had optional covers a few different factors.

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Speaker 2: But if she is in titled to a refund, we

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Speaker 2: are working really hard to make contact with everyone by

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Speaker 2: the end of this calendar year, and she'll receive either

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Speaker 2: an email or a letter, depending on what details we

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Speaker 2: have for Jill, issue's a current member or if she

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Speaker 2: is already has bank account details registered with us, she

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Speaker 2: may just she may receive the payment with a follow

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Speaker 2: up letter.

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Speaker 1: Okay, somebody else he has texted and you might want

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Speaker 1: to respond to this. RaaS increase my home insurance by

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Speaker 1: twenty eight percent. This year. That's how they're paying for

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Speaker 1: the refunds.

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Speaker 3: Yeah.

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Speaker 2: As I said, Matthew, the refunds have not impacted the

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Speaker 2: way we determine our policy premiums very much.

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Speaker 3: These are industry wide issues.

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Speaker 2: We have had to increased premiums to reflect inflation in

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Speaker 2: various aspects of our supply chain, particularly in the home.

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Speaker 2: Some materials, building materials have increased quite significantly, and so

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Speaker 2: if your home is made of those.

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Speaker 3: Materials, then unfortunately you might see.

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Speaker 2: A slightly higher increase in your premium.

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Speaker 1: Okay, last week, and I'm sure you're across this story.

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Speaker 1: And separate to the refunds here, Compare the Market put

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Speaker 1: out a report and they said, from all the searchers

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Speaker 1: done on their website for car insurance for evs electric

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Speaker 1: vehicles are half as much to ensure as a conventional car.

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Speaker 1: Is that the case with the RAA insurance premiums for

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Speaker 1: evs half as much as the conventional car in general?

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Speaker 2: Matthew, I probably can't answer that off the top of

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Speaker 2: my head, other than to say our experience to date

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Speaker 2: with evs is limited. We know that they're a rapidly

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Speaker 2: growing sector of the market, but we priced our EV's

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Speaker 2: in the same way we price all of our other products.

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Speaker 2: We certainly don't have any I don't think that they're

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Speaker 2: cheaper that we know that they can be more expensive

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Speaker 2: to replace, and internationally, what we know is that we

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Speaker 2: have seen higher numbers of what we would call total

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Speaker 2: losses across that sector just because of the involvement or

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Speaker 2: I guess, the issues with the batteries. So I don't

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Speaker 2: think I could tell you exactly like for like whether

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Speaker 2: a new EV is more expensive, but they tend to

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Speaker 2: be a more expensive vehicle and so that usually flows.

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Speaker 3: Through to premium.

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Speaker 2: And we know that there are a slightly higher incidance

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Speaker 2: of total losses that's been experienced overseas, although we haven't

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Speaker 2: yet seen this within the South Australian market.

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Speaker 1: All right, appreciate your time, Tara, thank you, Thank you.

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Speaker 3: Matthew.

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Speaker 1: Sarah Page, CEO of RAA Insurance