Insurance provider IAG has been fined $19.5 million for overcharging more than 200,000 customers by failing to deliver the discounts and benefits that were promised.
The High Court issued the penalty following legal action by the Financial Markets Authority, after the company acknowledged it had failed to provide the multi-policy discounts and other benefits outlined in their policies.
FMA executive director of response and enforcement Louise Unger stated that IAG’s breaches were the most extensive seen in any similar case the authority has taken to court, warranting a substantial penalty.
“IAG is New Zealand’s largest insurer. It is a large and sophisticated market leader and accordingly plays a vital role in upholding market standards, yet its significant underinvestment led to widespread failures of its systems and processes, to the detriment of its customers.”
“It also failed to respond to and report many of the issues in an appropriate timeframe.”
Unger described the nature and extent of IAG’s contraventions as the most aggravating aspect of the company’s conduct, further worsened by its delay in reporting the issues.
IAG operates under the AMI, NZI, and State insurance brands, selling policies both directly and through multiple banks. Some of the breaches date back over 20 years and were attributed to outdated and inadequate systems.
IAG’s New Zealand chief executive Amanda Whiting acknowledged that the company had made historic mistakes.
“Since self-identifying these issues, our priority has been to put things right for impacted customers, offering a sincere apology and issuing refunds.
“We are doing everything to prevent these issues from happening again.”
She said that repayment to all affected customers was completed earlier this year.