IAG New Zealand will not challenge court action brought by the Financial Markets Authority over failures to correctly price premiums and properly advertise and apply discounts.

The insurer says it “promptly acknowledged its wrongdoing” after it identified the issues and notified the regulator.

FMA head of enforcement Margot Gatland said last week: “The scale of IAG’s fair dealing breaches is extensive, impacting its core business.

“IAG is New Zealand’s largest general insurer, including in the personal lines insurance market. Its distribution model relies on its brands and distribution partners, which reinforces the importance of the reliability of its systems.”

The breaches affected about 269,000 customers and resulted in overcharges of $NZ35 million ($32.02 million), with a net gain to IAG of $NZ31.1 million ($28.46 million), according to the regulator.

Ms Gatland says IAG self-reported the breaches and this was followed by “very early admission of liability, and its full co-operation, including its commitment to an undefended proceeding”.

She adds IAG has provided “regular updates as to its full customer remediation and its significant system upgrades designed to prevent further breaches”.

IAG New Zealand CEO Amanda Whiting said: “We are doing everything to prevent these issues happening again. Our investigations also found that a significant number of customers benefited from being undercharged.”

In a statement to insuranceNEWS.com.au she says the underlying issues have been fixed, and repayments will be completed by June 30.

“Since identifying these issues, our focus has been on putting this right for our customers who were impacted, providing them with their refund and apologising for our mistakes,” Ms Whiting said. “IAG recognises that historically it made mistakes, and it has invested heavily in systems and processes that needed improvement. Significant changes have been made and will continue to be made.”

The FMA says some of the issues at IAG date back more than 20 years, but the proceedings at the High Court in Auckland are limited to breaches occurring after introduction of the Financial Markets Conduct Act in April 2014.

The proceedings feature eight pleaded causes of action including IAG’s inconsistent application of discounts on ASB-branded policies; failure to provide discounts on Westpac-branded policies; and overcharging ASB and AMI customers for premiums and emergency service levies.