IAG Fined Record $19.5M for Misleading 240,000 Customers

IAG has been fined a record $19.5 million for misleading close to 240,000 customers. The penalty, levied by the Commerce Commission, is the largest ever issued to an insurance company in New Zealand.

The issue stemmed from IAG’s failure to disclose premium increases on credit card transactions to its customers. This occurred between October 2012 and February 2014. The company, which trades under brands like AMI, State, and NZI, incorrectly charged the credit card fees to a significant number of its policyholders.

The Commerce Commission’s investigation revealed that IAG had failed to provide clear and upfront information about these fees. This lack of transparency meant that customers were unaware of the additional costs being added to their premiums when paying by credit card. The commission highlighted that IAG’s conduct was a breach of the Fair Trading Act.

IAG has acknowledged the misconduct and has been cooperating with the Commerce Commission’s investigation. The company has initiated a process to repay the affected customers, with efforts underway to contact those who were overcharged.

Key Points

• $19.5 million fine
• Nearly 240,000 customers misled
• October 2012 to February 2014 timeframe for non-disclosure of premium increases on credit card transactions
• Largest fine ever issued to an insurance company in New Zealand

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