The Financial Markets Authority - Te Mana Tātai Hokohoko - has filed a civil proceeding against insurer IAG New Zealand Limited (IAG) for fair dealing breaches in relation to its insurance products. The proceeding has eight causes of action relating to 11 alleged breaches of section 22, under Part 2 of the Financial Markets Authority Act (FMCA) - false or misleading representations.
The breaches arise from IAG's failures to correctly price the premiums charged to customers, and its failures to correctly advertise and apply important discounts to its insurance products sold via its business divisions and distribution partners.
IAG self-reported the issues following the FMA's Conduct and Culture reviews of banks, life insurers, and fire and general insurers.
FMA Head of Enforcement, Margot Gatland, said: "The scale of IAG's fair dealing breaches is extensive, impacting its core business. 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.
"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 cooperation 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."
Some of the issues date back more than 20 years, however, the FMA's claim is limited to conduct from the introduction of the FMCA, which came into effect from April 2014. Approximately 269,000 customers were affected by the pleaded breaches, resulting in overcharges of approximately $35 million, with net gain to IAG of approximately $31.1 million.
The proceedings were filed in the High Court in Auckland.
Each cause of action can be found in the notes section below.
