Insurance Australia Group's (ASX:IAG) New Zealand unit is facing civil proceedings filed by New Zealand's Financial Markets Authority (FMA) over alleged breaches of fair dealing related to its insurance products, according to a Friday statement by the regulator.

The FMA claims IAG New Zealand failed to properly price premiums and apply discounts on products sold through its business divisions and partners, impacting 269,000 customers and leading to overcharges of NZ$35 million, with a net gain of NZ$31.1 million for IAG, per the statement.

The claim focuses on IAG New Zealand's conduct since April 2014, when the Financial Markets Conduct Act came into effect. The proceedings were filed in the High Court in Auckland.

IAG does not intend to defend itself against the claims, according to the statement.

"IAG's self-reporting was followed by its very early admission of liability, and its full cooperation including its commitment to an undefended proceeding," said Margot Gatland, head of enforcement at FMA. "IAG worked closely with the FMA by way of proactive assistance in support of the efficiency of the investigation, in addition to providing regular updates as to its full customer remediation and its significant system upgrades designed to prevent further breaches."