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Vero Insurance is facing High Court action over accusations it misled customers about multi-policy discounts resulting in them being overcharged $8.7 million.
The Financial Markets Authority (FMA) filed proceedings against the New Zealand insurer for incorrectly stating the premiums owed by about 47,000 customers.
The charges followed the FMA and Reserve Bank ongoing crackdown on the financial sector, which has resulted in banks repaying $109m to nearly a million people and insurance companies returning $43m to half a million customers.
The FMA said multi-policy premium discounts should apply to customers with house and contents, vehicle and boat insurance under one policy.
However, it said Vero failed to apply the discounts due to errors and deficiencies in its systems, including data entry errors by Vero employees and some intermediaries, which sold the policies on behalf of Vero.
"By filing this case, we are sending a strong message that financial services firms must invest in robust systems and controls," FMA head of enforcement Margot Gatland said.
The issue arose in 2009, but the charges cover only the period from April 2014 to May 2022, when the FMA's regulations came into force.
FMA said Vero had been cooperating and was understood to have refunded more than $10m to affected policyholders.
"We are sorry for the impact this has had on some customers," Vero chief executive Jimmy Higgins said, adding it had taken steps to remedy the issue and had apologised and reimburse customers, past and present.
"We have been working hard to contact anyone impacted, whether they still have a policy with us or not."
Vero is part of Australia's Suncorp Group.
