FMG Insurance and Farmers’ Mutual Group (FMG) have confessed to providing misleading information on specific insurance products to thousands of customers.
FMG self-reported the incident.
The Financial Markets Authority (FMA) investigation revealed that customers were charged for specified items offering no extra insurance coverage, along with flawed inflation adjustments to insured sums.
From 2012 to 2024, certain FMG household contents insurance customers faced extra premiums for specified items already covered by their general contents sum insured, resulting in double charging.
Between April 1, 2014, and 2024, FMG overcharged 3,904 customers, who have since received $1.9 million in remediation for the excess premiums.
FMG also issued five claims top-up payments totalling around $6,000.
The insurer admitted to misleading representations about the need to specify items and the extra coverage provided, violating sections 22(d) and 22(g) of the Financial Markets Conduct Act.
Additionally, from 2013 to 2024, FMG imposed annual flat-rate increases on certain customers’ maximum insurance limits, despite policies indicating inflation-based adjustments—or lacking an inflation clause entirely.
These adjustments, misaligned with policy wording, impacted 54,642 customers from April 1, 2014, to 2024.
Around 26,000 customers qualified for refunds due to overcharged premiums, while another 480 received claim top-up payments.
FMG issued false or misleading statements in renewal notices, claiming inflation adjustments had been applied and premiums calculated per policy terms—after asserting its right to those charges.
It has paid out approximately $3.38 million in remediation for the issue. FMG has also agreed to a $2.1 million payment in lieu of a pecuniary penalty under an enforceable undertaking.
“Following our investigation, we determined that FMG’s representations to customers were false or misleading and caused customer harm,” FMA head of enforcement Margot Gatland said.
“The FMA will continue to prioritise fair customer outcomes and take action where misleading conduct occurs in the financial services sector.”
Meanwhile, FMG chief executive Adam Heath issued an apology to clients and members for the issues and the distress it brought.
“All affected clients have been contacted, and our refund processes will be substantively complete by the end of March 2026. Approximately $5.3m will have been paid to clients in refunds and claim top-ups once these issues are fully remediated.”
Heath said FMG has improved its systems, processes, and controls to prevent similar issues in the future.