FMA issues public warning to insurer Aioi Nissay Dowa over $700k overcharging

Aioi Nissay Dowa Insurance overcharged over 5000 customers across nine years.

Aioi Nissay Dowa Insurance has been issued a public warning by the Financial Markets Authority – Te Mana Tātai Hokohoko after overcharging around 5000 customers who purchased motor vehicle insurance.

Aioi Nissay Dowa Management New Zealand, the subsidiary responsible for providing services to customers in New Zealand, notified the Financial Markets Authority (FMA) of the issue in March 2024.

The discount issue related to policies that did not receive their multi-vehicle discount and/or multi-policy discount, resulting in overcharges to customers on their motor vehicle insurance policies.

The insurance company sold the policies through various vehicle dealerships and online, and overcharged 5055 customers over a period of nine years by nearly $700,000.

FMA executive director of response and enforcement Louise Unger said customers should rightly expect to be treated fairly and that promises made to them will be honoured.

“Manual processes used to identify customers with more than one policy failed, and customers eligible for discounts were not identified,” Unger said.

“This resulted in AIOI [Aioi Nissay Dowa Insurance] issuing incorrect invoices and contravening the fair dealing provisions set out in part two of the FMC Act, with a significant number of customers impacted by the issue.”

Unger said in this case AIOI acted responsibly in notifying the FMA at its earliest opportunity, and self-reported the issues three days after it became aware.

She said they had taken proactive steps to identify and notify all affected policyholders, with steps made to make remediation payments.

AIOI has also made efforts to prevent the issue from recurring.

“There is no evidence of deliberate misconduct, and the root cause of the issue can be attributed to either poor controls or ineffective systems.

“The FMA has a number of tools available, and we consider that a public warning is appropriate in this case.”

Unger said she expected financial institutions to invest in quality systems and controls that enable them to deliver on advertised promises.

She added that they should be able to identify issues and be capable of resolving those issues effectively and quickly.

“We also expect that financial institutions are proactively reviewing their products and services to ensure that they perform in the way they are described.

“Over the past several years, the FMA has clearly communicated its expectations around ensuring premiums are accurate, transparent, and administered correctly. However, we continue to encounter issues with discounts and premiums not being correctly applied.”

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.

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