FMA warns customers to check insurance cover
Insurance customers shortchanged by their insurer should expect to hear from the provider, the Financial Markets Authority says, but a report into the industry’s shortcomings should serve as a reminder to regularly check your cover.
The FMA this week released the findings of its report into the conduct of general insurers. It said they were not prepared for new legislation that will require them to establish systems and processes to ensure good conduct and fair treatment of customers.
It found failures across the industry and, as a result, six insurers withdrew policies that offered poor value for money.
Issues identified that required remediation included multipolicy discounts not being applied, overcharging on agreed premiums, no-claims bonuses not being applied, late payment fees being charged without cause, customer data being inaccurate, and out-of-date product features that were unlikely to be claimed.
‘‘While the remediation activity is good news for thousands of customers who will be receiving refunds, the issues themselves are possibly the most disappointing aspect of our review,’’ the FMA said. ‘‘The basic requirement that premiums are accurate, transparent, administered correctly and with value communicated to the customer has clearly not been met in a number of situations. This is particularly important for fire and general insurance products, where it is very hard for the customer to understand how their premiums have been calculated.
‘‘Furthermore, remediation needs to be done correctly. Where issues requiring remediation are identified, insurers must commit sufficient expertise and resources to ensure customers are recompensed in a timely manner and the root cause is addressed so the issue does not reoccur.’’
IAG and MAS were the only insurers that met the FMA’S expectations in full.
A spokesman said legacy products and multi-policy discounts not being applied were most prevalent in car, house and contents insurance.
‘‘It’s up to insurers to ensure they have appropriate systems and controls in place to prioritise customers’ interests and products are suitable for consumers. We will be following up with general insurers to ensure they are quantifying and following through with remediation,’’ he said. ‘‘However, customers should occasionally review their insurance policies to ensure their needs are being met and if they are content with the premiums being charged.’’