Southern Cross Travel Insurance has been fined $1.1 million for deceiving consumers regarding discounts.
Members of Southern Cross Medical Care Society were given a discount, as well as customers who bought a Southern Cross Travel Insurance policy online or used specific promotional codes when purchasing their travel insurance.
Buyers were informed that the discounts would cover their entire premiums, but the discounts were applied only to the base premiums.
Southern Cross said it intended to apply discounts solely to the base premiums, but this was not clearly communicated to customers.
The company reached an agreement with the Financial Markets Authority (FMA) after acknowledging that it failed to apply the promised discounts, resulting in customers being underpaid by $3.5 million. This agreement is an enforceable undertaking, allowing the FMA to take action if the terms are not met.
Margot Gatland, the authority’s head of enforcement, said that insurance companies must fulfil the commitments they make.
“This enforceable undertaking confirms that insurers are required to ensure representations they make to customers about potential discounts can be delivered and that customers are treated fairly.”
“We encourage people to check their insurance documents and complain if they are not paying the correct premiums,” Gatland said.