Car Insurance Loyalty Discounts (NOT)

The quote from RACQ for renewing my car insurance for another year is $718. I managed to get 5 other quotes which were less than the RACQ quote. Yes the conditions eg excess were the same for all quotes. They can quote any amount that they choose. What I am complaining about is that they state that they gave me 5 discounts and after applying those discounts the quote still came in the highest.
RACQ in reply to my request sent me an email detailing the discounts:
Thank you for contacting us in relation to the discounts applied to your insurance policy for your car

The discounts that we are able to offer you are:

An excess variation for having a higher excess - $52.10
Gold50 roadside assistance loyalty discount - $153.50
Multi product discount - $46.16
Driver excellence bonus - $72.36
No claim discount - $1384.95

I replied to their email pointing out that their discounts added up to $1709 and when this was added to their quote - the original quote then was $2427.
$2427 is a nonsense figure. So after all those discounts The RACQ quote of $718 is still the highest I received. It is clearly apparent that their discounts are applied to a nonsense figure and produce a quote that is still the highest.
As I said in my feedback to them it appears that they are attempting to mislead their members with fake discounts.
I have been a member of the RACQ for over 50 years and I have two car and one house insurance policies with them. You would think that a loyalty discount would be real not designed to mislead.

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Assume these were all on the same basis.
EG Same dollars if agreed value, same details in the full PDS for loan vehicle if required, type and duration limits, etc. Replacement vehicle conditions or payout if written off.

We left RACQ insurance many years ago for Suncorp. Whether the level of service offered by each is equivalent, we’ve not needed to claim on Suncorp. Experience with RACQ had been positive for the one minor claim we made.

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Some vendors who want repeat business give loyalty bonuses. Others offer a lazy tax, that is subsequent renewals cost more than getting your business the first time. To counteract that get back to them with the cheapest directly competitive quote and tell them you are going to walk if they don’t at least match it. Don’t bluff, if they won’t play then do it.

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RACQ customer service told me they would not match prices. I did not renew the policy with them. The same will probably happen with the other two.
IANS

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There are not really many different insurers, just different groups selling them with minor to no differences excepting the logo and name, with the underwriters in competition with themselves (not really) as well as with the other few. From an older dormant topic -

As for ‘loyalty’ or other discounts? A game they play. As noted in other topics it is often best to buy a new policy every year rather than take up the ‘loyalty’ renewal, even if with the same company.

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We check our car insurance policy as per the renewal and also being a new customer on their websites. We often find that the policies vary in price compared to the renewal, or the agreed/market valuations are different.

This year we renewed our car insurance as a new customer with the same company rather than automatically renewing the previous policy. It was slightly better for us as a new customer we could achieve a better agreed value with the policy cost being similar. Fortunately their system didn’t recognise the number plate as a existing policy, and allowed a new policy to be taken out. We also got numerous reminders about the old policy expiring, even after we took out the new policy. ‘Looks like the left hand doesn’t communicate with the right hand’.

It is worth doing it for RACQ to see what their policy cost would have been as a new customer - to see if there was any difference. You may need to do this without applying any member discounts (entering your membership number) and this may link it to the old policy. The membership discount should be the same for old and new policies.

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Consider that $1384.95 of that was ‘No Claims Bonus.’ It is not uncommon for insurers to offer very large discounts for no claims bonus (some as high as 50% or more). What it means is that drivers without a no claims bonus may receive a higher premium that an insurer that does not offer/offers a minor no claims bonus. It is entirely possible that the same policy would cost $2427 for someone without any no claims bonus.

Disclosure: I do not work for RACQ, but do work in insurance.

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However, the end result is still that RACQ claims they are giving a $1709 discount but they are the highest quote. I think that most customers who were told they are getting five loyalty discounts worth $1709 and were then quoted the highest quote - they would say - there is no discount I have been mislead. FAKE DISCOUNTS !

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A sad truth of insurance (and products and services in general) is that the marketing types long ago discovered a segment of consumers buy ‘discounts’ not the ‘price’, and sell accordingly. They lose some customers but the ones they keep deliver peak profits and are ‘good business’.

One business theory is that not all customers are good customers worth keeping because they demand high value for money and are thus low profit customers, and the effort/cost to keep them is not worthwhile.

Insurance and electricity/gas marketing are good examples. How many insurance ads do we see where you can ‘save $100 on your insurance’ by switching to MyCompany online? That $100 is usually against the price if the customer rang in and bought the same policy from the same company from an agent rather than online. The policy might be $1,000 less from another company - but some will buy that $100 ‘discount’.

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I have seen the same game with car sales. The asking price is set high so that they can give a large trade-in on the buyer’s old car. Apparently some people like this compared to a lower asking price and a lower trade-in that arrives at the same result. They tell their mates proudly “I got them to give me $xyz for that clapped-out old thing I had” even if they paid over the odds. The human mind is a wonderful thing!

One difference that some people seem to not notice is that the registration on a new car is calculated from the actually retail sale price not the net, so the big trade-in actually costs you money. Having arrived at the lowest net the vendor will stand it would be best to negotiate the trade-in to be $1.

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Just because other companies are doing the same thing as RACQ that does not mean that they should get away with it. Claiming to give a $1709 discount to a very loyal customer and then billing the customer with a high price is at best deliberatly misleading. They should not get away with it.

We can name and shame. What else can be done ?

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If they are doing you wrong then walk - that is the consumer’s ultimate power. Not every problem is susceptible to regulation.

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Walking away from this misleading behaviour does little to solve the continuing problem. RACQ has found that it is a profitable habit to mislead its customers. They should not get away with it.

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If one person does it no, if all do it the vendors will reform right quick. It ain’t called the lazy tax for nothing.

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The problem is RACQ Ins has hidden what they are doing fairly well. They list several discount names and tell the customer how good that is. It is only when you ask them for an amount for each discount and then you can see the con. Not many people would ask for the discount details thus they get away with it. FAKE DISCOUNTS.

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To be honest I’m actually impressed that they were able to give an exact breakdown. I don’t think many insurers would do that. As I mentioned above, the fact the policy isn’t the cheapest one out there doesn’t make it a fake discount. The discount is probably real, and the policy would cost that full amount for someone with no discounts at all

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So you are saying that the quote of $2427 is a real quote with the discounts coming off that. Then what about all the quotes from the other major insurance companies. They ranged from $650 to $710, without any discounts. I don’t think RACQ Ins would sell too many policies at $2427. Why are you always making excuses for RACQ Ins ? It is quite a simple complaint. They claim that they are giving a $1709 discount to a good Gold50 (for 50 years) customer when their quote, if compared to other companies quotes, has no discount at all.

They don’t hide the total at the bottom that you need to pay, how they arrive at that total is not important. You are making this harder than it need be. I get it that you are offended that they tried to mislead you but you were not mislead so move on.

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“how they arrive at that total is not important” you say. You could not be more wrong ! Once I found out the dollar amounts of the discounts I had proof that the discounts were not real. Also, I am not offended - I am bloody annoyed because RACQ Ins tried to mislead a loyal Gold50 customer with fake discounts. I am hoping that some RACQ Ins customers might read this and get a warning about FAKE DISCOUNTS. I will “move on” perhaps when I get a satisfactory response from RACQ Ins.

Firstly, thank you for alerting others about his issue.

Perhaps they are genuine discounts. It is possible that if someone who didn’t qualify for any of the five discounts you mentioned would receive a quote of $2,427 for insurance of a similar vehicle. Unless you get a quote for a just licenced driver who doesn’t qualify for those discounts, you will never know.

Your statement that the quoted amounts for competitors do not include any discounts is likely to be incorrect. It is highly likely that those quotes include a good driver or no claim bonus discount and are substantially lower than would be the case if you had no driving history or a poor claims record.

As nobody, with the possible exception of you, knows whether or not the RACQ quote might provide better or worse insurance cover than the other insurers, we don’t know whether or not they are ripping people off.

As you have now insured with another company, it would be great if you could advise of the increase, if any, in the cost of that policy when you get your next renewal.

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