RACQ algorithmic pricing error overcharges 270,000 insurance customers — $30M remediation
RACQ Insurance
What happened
RACQ Insurance discovered its automated insurance pricing algorithm had systematically overcharged approximately 270,000 Queensland customers on home, car, and boat insurance policies. The pricing algorithm failed to correctly apply loyalty and renewal discounts, with the error compounding over multiple renewal cycles. The insurer proactively disclosed the issue to ASIC and the Australian Securities and Investments Commission began monitoring the sector for similar algorithmic pricing errors.
Outcome
RACQ remediated $30M to 270,000 affected customers. Pricing algorithm audited and corrected.
Cite this incident
https://corporateai.com.au/incidents/racq-pricing-2022Quick facts
- Date
- 1 April 2022
- Organisation
- RACQ Insurance
- Sector
- Insurance
- Severity
- Medium
- Regulatory bodies
- ASIC
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