Youi books $ 350k fine for shonky sales tactics

South African- owned insurer Youi NZ expects to pay a $ 350,000 fine for breaking the law with misleading sales tactics.

In August, the Auckland- based unit of the insurer pleaded guilty to 15 representative charges brought against it by the Commerce Commission after an investigation based on complaints that policies were sold when only quotes were requested and failure to cancel insurance policies after being notified.

The Fair Trading Act imposes a maximum penalty of $ 600,000, but Youi has provided for just over half that in its 2016 accounts filed with the Companies Office.

“The Commerce Commission has filed charges against the company under the Fair Trading Act,” the accounts say. “Provision has been made for a penalty that may be payable as a result of these charges.”

The charges included making misleading representations on its website over customers’ ability to get a quote, during sales calls, including telling clients they had to provide bank or credit card details, asserting a right to payment for unsolicited policies, and sending invoices for insurance policies to unsolicited customers without saying they had no obligation to pay.

Earlier this month Youi, whose advertising slogan is “We Get You”, was fined $ 100,000 by the Insurance Council, which had also considered kicking the insurer out of the group.

Youi went through rapid growth in the latest financial year, boosting premium revenue to $ 26.2 million in the 12 months ended June 30 from just $ 5m a year earlier, while insurance claims climbed to $ 19.4m from $ 4.2m. Youi’s accounts show it got $ 161,000 from policy cancellation fees, up from $ 36,000.

The company reported a net loss of $ 11.1m in the year, compared to a loss of $ 14.8m in 2015, with directors saying “this business is in start- up phase and there i s no reason to believe that the business will not be able to recover these losses from its future operations”.

The insurer received $ 39,000 in Work and Income subsidies aimed at getting people into work who are most at risk of getting stuck on a benefit, up from $ 21,000 in 2015.

In June, the Ministry of Social Development said Youi was no longer getting the subsidy.