The FMA said AA Insurance's failure to apply discounts and bonuses amounted to more than $11 million in overcharges. Photo: RNZ / Dan Cook
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - has filed civil proceedings in the High Court against AA Insurance for three instances of misleading customers.
The FMA said the insurer's failure to apply discounts and bonuses amounted to more than $11 million in overcharges.
AA Insurance said it identified the issues as part of its regular and ongoing internal reviews and self-reported them to the FMA.
AA Insurance CEO Michelle James said the company had also apologised to affected customers.
"We accept there were aspects of our processes which weren't perfect, and we've put our customers at the heart of our response to these issues," she said.
"Late last year, we completed the comprehensive remediation programmes to put things right for our customers."
The regulator said the insurer had failed to apply a multi-policy discount to customers' invoices between 2015 and 2020, amounting in overcharges of nearly $5m affecting 112,463 customers.
The FMA said AA Insurance also failed to discount premiums to customers with AA memberships between 2014 and 2020, resulting in 112,613 eligible customers being overcharged nearly $3m.
As well, the FMA said 17,973 eligible customers were overcharged by $3.3m between 2005 and 2015 after the AA failed to apply a no claims bonus benefit on its comprehensive car insurance policies.
"This is the seventh civil proceeding case the FMA has brought under the fair dealing provisions of the FMCA [Financial Markets Conduct Act], since June 2020," FMA head of enforcement Margot Gatland said.
"All these cases point to system errors and process failures that for the most part date back prior to 2014, when the FMC Act came into effect.
"While we have acknowledged in each case the efforts companies have made to remediate customers for these issues, the length of time taken to identify and resolve the mistakes in the first place was a key factor in commencing civil court action."
The FMA was seeking a declaration from the court that AA Insurance had contravened section 22 of the FMC Act on all three matters and that it pay a pecuniary penalty for the breaches.