AIA will pay a pecuniary penalty of $NZ700,000 ($616,00) for false and/or misleading representations it made to affected customers in New Zealand, after the insurer filed a court notice last year admitting “all the facts and causes of action alleged” in proceedings taken by the Financial Markets Authority (FMA).

The Auckland High Court handed down its ruling last week, more than a year after the FMA commenced action against the insurer.

“AIA admitted to the conduct last year in court,” the FMA says in a statement. “The FMA and AIA agreed a penalty of $NZ700,000 reflected the seriousness of the breaches”

The regulator says in bringing these proceedings it sought to denounce the misconduct and hold AIA accountable for the breaches and any harm caused to the 383 affected customers, who were overcharged or had claims underpaid by more than $NZ413,000 ($363,717).

AIA self-reported the breaches when it was asked to provide information as part of the joint FMA/Reserve Bank of New Zealand conduct and culture review of life insurers in 2018.

The FMA says its proceedings against the insurer are based on three core breaches regarding incorrect and misleading communication to customers holding various life insurance and associated policies, including purported enhancement of policy benefits.

The breaches also led to charging of premiums after the termination of a policy and treating policies as terminated when they should have remained in force as well as incorrect inflation adjustments.

“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,” FMA Head of Enforcement Margot Gatland said.

“AIA accepted customers should be able to rely on the robustness of their insurer’s systems. AIA’s misconduct caused real harm by failing to correctly pay cover to a small number of sick or disabled customers.”

Click here for the court ruling.