The Financial Markets Authority (FMA) has commenced court proceedings against Medical Assurance Society (MAS) and its subsidiaries, alleging they failed to properly apply inflation adjustments, failed to apply multi-policy discounts and underpaid eligible life and disability claims. 

FMA says the alleged conduct between 2014 and last year breached fair dealing provisions under section 22 of the Financial Markets Conduct (FMC) Act 2013. 

It filed the proceedings in the High Court in Wellington seeking a declaration that MAS contravened the FMC Act and a pecuniary penalty. 

MAS, a membership-based insurance and investment company for New Zealand professionals, self-reported the issues including reporting one of the breaches as part of the FMA and Reserve Bank of New Zealand’s Conduct and Culture reviews. 

“The FMA alleges MAS’s failures were due to errors and deficiencies in its systems, including data entry errors by MAS employees,” the regulator said in a statement. 

“The FMA acknowledges that MAS has been cooperative with the regulator through its investigation since disclosing the issues.” 

In one of the alleged breaches, MAS applied an inflation adjustment of 3% instead of the inflation adjustment specified in policies of customers who had elected to receive an inflation adjustment. 

FMA says about 6267 customers were subsequently overcharged about $NZ1.74 million ($1.6 million) in premiums. MAS had reimbursed $NZ780,501 ($719,905) to the affected customers at the time the FMA filed its claim. 

MAS is unable to comment further on the proceeding while the matter is before the courts, a spokesperson said. 

The spokesperson says MAS “would like to apologise profusely to those of our members who were affected by these incidents”. 

“We self-reported the issues to FMA and have fully co-operated with their investigation of the issues,” the spokesperson told insuranceNEWS.com.au. 

“As a result of a fulsome conduct and remediation project, we have much improved systems, processes and controls to prevent these types of issues from occurring again. 

“We have remediated impacted members fully, including compensation.”