Having caused a stir in the Australian auto repair industry with its web-based Care & Repair system, IAG is in hot water across the Tasman.

IAG NZ, New Zealand’s largest motor insurer, has been fined $NZ127,000 ($108,400) after pleading guilty to 30 breaches of the Fair Trading Act. The Auckland District Court found IAG-owned State Insurance misled customers by steering them towards a preferred windscreen repairer.

State Insurance’s brochures and policy documents guarantee customers the right to choose their repairer, but call centre staff told claimants they could use only glass specialist Smith & Smith for windscreen work.

New Zealand’s Commerce Commission, which investigated the breaches, welcomed the result. Chairman Paula Rebstock says IAG gained a competitive advantage by promoting its free choice of repairer scheme. Having made the offer, it should have done more to honour it.

“Instead (IAG) misled customers and deprived them of the right to choose,” she said.

Each year State Insurance deals with more than 55,000 claims for automotive glass repair work. IAG pleaded guilty to only 30 cases of deception, but the large fine acknowledges the probability of many more incidents.