IAG New Zealand Limited is New Zealand’s largest insurer and has been penalised $19.5 million by the High Court for historical failures to correctly apply discounts to some customers and miscalculation of government levies.
The Financial Markets Authority (FMA) launched an investigation into the insurers conduct following self-reports from the company between September 2021 and December 2024. The breaches reported had affected approximately 269,000 customers and led to overcharges totalling around $35 million.
Who is IAG New Zealand Limited?
IAG New Zealand is the largest general insurer in New Zealand.
They have a number of brands – trading under the AMI, State, NZI, NAC, Lumley and Lantern brands, as well as providing the general insurance products sold by ASB, BNZ, Westpac and The Co-operative Bank.
IAG New Zealand employs over 4,000 people, insures over NZ$1.07 trillion of commercial and domestic assets and claim to hold relationships with one in every two New Zealand households. In other words they are a big business in New Zealand but are actually part of Insurance Australia Group, an ASX listed company with general insurance businesses in Australia and New Zealand.
What Did IAG NZ Do Wrong?
IAG NZ admitted to making false and misleading representations about its insurance products, including incorrect premium pricing and the failure to apply key discounts across policies sold through its business divisions and distribution partners.
While IAG NZ self-reported the 41 issues to the FMA, there is a need to take action against misleading practices to protect consumers and uphold trust in New Zealand’s financial system.
The FMA have said that the nature and scale of IAG’s contraventions was greater than those present in any other fair dealing case the FMA has to date taken to Court, and confirmed that the breaches were “the most aggravating feature of its conduct”, noting also that the company delayed reporting known issues to the FMA even after a culture and conduct review.
Have They Fixed The Issues?
Of course, businesses can make mistakes.
As mentioned and illustrated by the massive penalties, this was more than just a typo. The main issue was that the actions seemed misleading and then action was not taken immediately the issue was discovered.
Therefore the FMA and the Courts felt the need to take action.
Since this was reported IAG NZ have said that they are investing in new systems and processes, with significant changes ongoing. The company has said that it is doing everything to prevent a recurrence of these issues and also confirmed that all affected customer’s repayments were completed earlier this year.
