The Financial Markets Authority – Te Mana Tātai Hokohoko has initiated civil proceedings against IAG New Zealand Ltd for alleged breaches of fair dealing related to its insurance products. These breaches reportedly led to overcharges totalling approximately $35 million for 269,000 customers, resulting in a net gain of $31.1 million for IAG.
FMA said IAG incorrectly calculated the premiums charged to its customers. The insurance company identified and self-reported the issues.
“The scale of IAG’s fair dealing breaches is extensive, impacting its core business,” FMA head of enforcement Margot Gatland said.
“IAG is New Zealand’s largest general insurer, including in the personal lines insurance market. Its distribution model relies on its brands and distribution partners, which reinforces the importance of the reliability of its systems.”
Gatland stated that while some breaches extended over two decades, the FMA could only investigate and take action on those occurring from 2014 onwards, when the current legislation came into effect.
“IAG’s exemplary conduct in response to the FMA’s investigation must also be acknowledged. IAG’s self-reporting was followed by its very early admission of liability and its full co-operation, including its commitment to an undefended proceeding.”
“IAG worked closely with the FMA by way of proactive assistance in support of the efficiency of the investigation, in addition to providing regular updates as to its full customer remediation and its significant system upgrades designed to prevent further breaches,” Gatland added.
IAG’s New Zealand chief executive Amanda Whiting acknowledged the errors.
“I apologise to our customers who were inaccurately charged or did not receive the discounts they were entitled to at the time.”
“Since identifying these issues, our focus has been on putting this right for our customers who were impacted, providing them with their refund and apologising for our mistakes.”
Whiting said they had also identified a number of customers who were undercharged.