AIA fined $700,000 for misleading customers

The High Court at Auckland has ordered life insurer AIA to pay $700,000 for making misleading claims to 383 customers.

The insurer’s failures included overcharging for premiums, or underpaying claim amounts, by more than $413,000.

The Financial Markets Authority (FMA) brought the proceedings against AIA to “denounce the conduct” and ensure other financial institutions have robust processes in place to prevent similar breaches.

AIA had reported the breaches as part of the joint FMA and Reserve Bank conduct and culture review of life insurers in 2018.

Margot Gatland, FMA’s head of enforcement, said: “This outcome reiterates that financial institutions will be held to account if they fail to sufficiently invest in systems, controls and processes that ensure all customers are treated fairly.”

The judge noted FMA’s submission that AIA’s conduct would have likely caused emotional and financial harm to customers in already stressful circumstances.

In court last year, AIA admitted to the misleading conduct. The court noted that AIA has fully investigated and successfully remediated all the problems found as part of the 2018 review.

The insurer acknowledged its “system failures should not have occurred and should have been remedied more promptly”.

“AIA has now made significant investment to ensure these issues do not reoccur.”