Life insurer AIA hit with penalty of $700,000

Life insurance company AIA must pay $700,000 for false and misleading representations to customers.

The High Court at Auckland ordered the penalty after the Financial Markets Authority took action.

The insurer said it self-disclosed relevant issues to the FMA more than four years ago.

The authority said AIA admitted to the conduct last year in court.

Both parties agreed a penalty of $700,000 reflected the seriousness of the breaches.

The FMA said for some customers AIA’s conduct will likely have caused emotional harm as well as direct financial harm. Some of AIA’s customers were declined disability, income replacement and other healthrelated cover which was only available in inherently stressful circumstances, the FMA said.

The FMA said it wanted to denounce the misconduct, and hold AIA accountable for breaches and any harm caused to 383 affected customers.

The regulator said these customers were overcharged or had claims underpaid by more than $413,000.

Justice Michael Robinson said AIA had breached fair dealing provisions in the Financial Markets Conduct Act 2013.

And he said AIA made false and/or misleading representations in relation to customers’ insurance policies.

The authority said AIA wrongly told certain customers they were entitled to passback benefits without clarifying that the benefits only applied to post-2003 policies.

It said AIA also kept charging premiums when customers had no cover.

The regulator said AIA had since made significant investment to ensure these issues did not happen again.

The company’s chief executive Nick Stanhope said: “Our customer remediation process was completed over a year ago and, if a customer was impacted by one of the issues, they have already heard from us directly and we have put the issue right.”