Overcharged, double charged or not receiving promised discounts – all are shocking problems insurance customers are facing, a damning review of the insurance sector has found.
Thousands of consumers may soon find a bit of extra cash in their bank account, with companies being forced to pay them back for those incorrect charges.
The Financial Markets Authority surveyed 42 insurance companies to check if they were prepared for an upcoming new conduct licensing regime.
It found 95 per cent of fire and general insurers were acting “well below” expectations.
The country’s financial regulator says the responses from 30 insurers were “inadequate” and 10 were “deficient”.
Have you faced problems with your insurance company? Feel like you’ve been ripped off and want to tell your story? Contact Katie Bradford Katie.Bradford@tvnz.co.nz
“While new legislation is not yet in place, core conduct standards should apply across the financial sector. We’ve made this point repeatedly over several years and provided various resources and published reports for this section of the industry to measure themselves against," Clare Bolingford, FMA director of banking and insurance, said.
“Prior to our inquiries, many firms claimed they were confident no significant issues existed. But this review has revealed a number of instances of poor conduct.”
Many companies simply failed to even have a conduct and culture policy.
The review says the “vast majority” of insurers need to do much more work to meet expectations and if they don’t – they are being warned they face further regulation.
Major issues were also identified with various products available to customers, many of poor value.
Several insurers are now in the process of looking to repay thousands of customers.
But the FMA says that’s the “most disappointing aspect of the review”.
Those incorrect charges are for discounts not being applied, no-claims bonuses not being applied, late payment fees being charged for no reason, out-of-date product features and benefits that are unlikely to be ever be claimed.
And the authority is warning the insurers to make those remediation payments “correctly” and as fast as possible.
Twenty-eight out of 42 insurers have removed, or promised to get rid of, sales incentives for staff.
The Insurance Council of New Zealand - Te Kāhui Inihiua o Aotearoa today acknowledged the FMA conduct and culture review of the fire, general and health insurance sector, and the need for constant improvement of the sector.
"The snapshot we have of the sector as at October 2019 shows that much improvement is needed before the Financial Markets (Conduct of Institutions) Amendment Bill (COFI) comes into force as expected in early 2023,” Tim Grafton, chief executive of ICNZ, says.
“This gives the insurance sector the opportunity to work proactively with the FMA to address all areas of concern so we can meet their expectations at that time."
Grafton says it is important to note that much has been done since the review was undertaken almost two years ago to improve systems and customer outcomes.
"We do not believe that the report reflects the current state for ICNZ members.
"Our sector is fully committed to good customer outcomes as seen by the multiple responses to customer vulnerability arising during and from the Covid-19 lockdowns."