Following an investigation, Southern Cross Benefits Limited (trading as Southern Cross Travel Insurance) has admitted liability for breaches of fair dealing laws and has paid $1,105,000 to the Crown.
The payment is made in lieu of a pecuniary penalty in respect of contraventions relating to misleading representations made by Southern Cross Benefits when it was offering Southern Cross Travel Insurance discounts to prospective customers. The contraventions relate to sections 21 and 22(d), (f) and (h) of the Financial Markets Conduct Act 2013. The payment is made under an enforceable undertaking provided by Southern Cross Travel Insurance to the FMA.
Customers were offered a discount for being a member of Southern Cross Medical Care Society, a discount for purchasing a Southern Cross Travel Insurance policy online and a discount for purchasing a Southern Cross Travel Insurance policy using certain promotion codes.
While statements on the Southern Cross Travel Insurance website and emails to customers represented that discounts would be applied to customers’ entire premiums, the discounts were only applied to base premiums. Southern Cross Travel Insurance had intended that the discounts would only apply to base premiums but their communications to customers did not clearly communicate this.
The difference between the discounts that customers received, and the discounts they would have received if the discounts had been applied to their entire premiums, was $3,501,221.
Financial Markets Authority – Te Mana Tatai Hokohoko FMA Head of Enforcement Margot Gatland, said: “This enforceable undertaking confirms that insurers are required to ensure representations they make to customers about potential discounts can be delivered, and that customers are treated fairly.
“We encourage people to check their insurance documents and complain if they are not paying the correct premiums.”
The FMA acknowledges Southern Cross Travel Insurance’s cooperation throughout the FMA’s investigation. Southern Cross Travel Insurance has also fully remediated customers impacted by the discounts.
