The Financial Markets Authority (FMA) has filed civil proceedings against IAG New Zealand in the High Court in Auckland for breaching fair dealing provisions under the Financial Markets Conduct Act (FMCA).
The case includes eight causes of action covering 11 breaches related to false or misleading representations.
The breaches concern pricing errors in premiums, misapplication of discounts, and incorrect representations across several insurance products distributed through IAG’s business units and partners.
Approximately 269,000 customers were affected. The total overcharges reached NZ$35mn ($19.3mn), generating a net gain to IAG of NZ$31.1mn.
IAG reported the issues to the FMA, accepted responsibility, and cooperated throughout the investigation. The company stated that it had corrected the issues and would complete all repayments by 30 June.
CEO Amanda Whiting said the company apologised and refunded affected customers. She added that some customers had been undercharged and benefited from pricing discrepancies.
Since identifying these issues, our focus has been on putting this right for our customers who were impacted, providing them with their refund an apologizing for our mistakes.
Chief Executive Officer Amanda Whiting
“Our investigations also found that a significant number of customers benefited from being undercharged,” Whiting said.
According to the FMA, some of the identified issues date back over 20 years. However, the claim covers conduct from April 2014, when the FMCA came into effect. The case follows the FMA’s broader conduct reviews across the financial sector.
FMA head of enforcement Margot Gatland noted that IAG, as New Zealand’s largest general insurer, relied on its brands and partners, making the reliability of its systems essential. She acknowledged IAG’s cooperation, early admission of liability, and support for an undefended proceeding. IAG also provided regular updates on remediation and system changes.
largest general insurer, including in the personal lines insurance market, and its distribution model relies on its brands and distribution partners, which reinforces the importance of the reliability of its systems. The scale of IAG’s fair dealing breaches is extensive, impacting its core business.
Margot Gatland, the FMA’s head of enforcement
Among the specific failings, IAG applied advertised multi-policy discounts inconsistently, misrepresented discount eligibility for caravan and trailer policies, and failed to apply no-claims bonuses as intended. System errors led to incorrect premium increases for Westpac-branded policyholders and inconsistencies in applying discounts for owner-occupier home policies bundled with other products.
Minimum premiums embedded in pricing algorithms prevented some customers from receiving full discounts. Multi-policy discounts were not granted to eligible BNZ and Co-Op-branded policyholders, and misleading information appeared on Co-Op’s website.
Errors in calculating dwelling numbers on ASB and AMI home policies also resulted in inflated levies and premiums.
Additionally, BNZ and Co-Op-branded home policies included a non-optional glass breakage extension. This cost should have been included in the base premium before applying discounts.
Instead, IAG’s systems treated it as optional, excluding it from discounts.
Finally, customers holding high-value or Tesla vehicle policies were told they qualified for multi-policy discounts based on standard rules. In practice, different criteria were applied, and some customers did not receive the advertised discount.
