By Ryan Hewlett

April 4 - (The Insurer) - New Zealand’s Financial Markets Authority has filed a civil proceeding in the Auckland High Court against insurer IAG over fair dealing breaches related to its insurance products.

The regulator said IAG New Zealand failed to correctly price the premiums charged to customers, and failed to correctly advertise and apply discounts to insurance products sold via its business divisions and distribution partners.

The proceeding has eight causes of action relating to 11 alleged breaches.

The regulator said IAG self-reported the issues following the FMA’s Conduct and Culture reviews of banks, life insurers, and fire and general insurers.

Some of the issues date back more than 20 years, however, the FMA’s claim is limited to conduct from the introduction of the Financial Markets Conduct Act, which came into effect from April 2014.

Approximately 269,000 customers were affected by the pleaded breaches, resulting in overcharges of approximately NZ$35 million ($19.8 million), with a net gain to IAG of approximately NZ$31.1 million.

The FMA's head of enforcement Margot Gatland described the scale of IAG’s fair dealing breaches as “extensive”.

“IAG is New Zealand’s largest general insurer, including in the personal lines insurance market. Its distribution model relies on its brands and distribution partners, which reinforces the importance of the reliability of its systems,” said Gatland.

She added: “IAG’s exemplary conduct in response to the FMA’s investigation must also be acknowledged. IAG’s self-reporting was followed by its very early admission of liability, and its full cooperation including its commitment to an undefended proceeding.”