The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - has issued a public warning to Aioi Nissay Dowa Insurance (AIOI) for failure to apply advertised discounts to customers purchasing their motor vehicle insurance policies.
In March 2024 Aioi Nissay Dowa Management New Zealand Limited (the subsidiary responsible for providing services to customers in New Zealand) notified the FMA of a discount issue relating to policies that did not receive their multi-vehicle discount and/or multi-policy discount, resulting in overcharges to customers on their motor vehicle insurance policies. The policies were sold through various vehicle dealerships and online.
AIOI overcharged 5,055 customers almost $700,000 over nine years.
FMA Executive Director of Response and Enforcement Louise Unger says: "Manual processes used to identify customers with more than one policy failed and customers eligible for discounts were not identified. This resulted in AIOI issuing incorrect invoices and contravening the fair dealing provisions set out in Part 2 of the FMC Act, with a significant number of customers impacted by the issue.
"Customers should rightly expect to be treated fairly and that promises made to them will be honoured. We expect financial institutions to invest in quality systems and controls that enable them to deliver on advertised promises and to also identify issues and be capable of resolving those issues effectively and quickly.
"We also expect that financial institutions are proactively reviewing their products and services to ensure that they perform in the way they are described."
"Over the past several years, the FMA has clearly communicated its expectations around ensuring premiums are accurate, transparent, and administered correctly. However, we continue to encounter issues with discounts and premiums not being correctly applied."
"In this case, AIOI acted responsibly in notifying FMA at its earliest opportunity, self-reporting the matter three days after it became aware of the issue. They have taken proactive steps to identify all affected policy holders, notify them and make remediation payments. They have also taken steps to prevent the issue reoccurring.
"There is no evidence of deliberate misconduct, and the root cause of the issue can be attributed to either poor controls or ineffective systems.
"The FMA has a number of tools available, and we consider that a public warning, is appropriate in this case."
