Vero Insurance New Zealand has so far remediated nearly 50,000 customers as part of ‘making things right’ following a pricing issue that is now the subject of an Auckland High Court case.
The insurer, which is part of Brisbane-headquartered Suncorp Group, spoke to Insurance Business after the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko filed court proceedings seeking a declaration that Vero had violated the Financial Markets Conduct (FMC) Act, which came into force in 2014. The regulator also wants the company to be fined over the breach.
On Monday, the watchdog said: “The FMA alleges between April 2014 and May 2022 Vero and its intermediaries issued [incorrect] invoices to approximately 47,000 affected customers and effectively overcharged $8.7 million in premiums as a result of the issue.
“The FMA claims Vero failed to apply [multi-policy] discounts due to errors and deficiencies in its systems, including data entry errors by Vero employees and some intermediaries (which sold the policies on behalf of Vero). The FMA alleges that liability primarily rests with Vero as it designed, owned, and maintained the systems at fault.”
According to Vero, the failings of which were said to be already existent in 2009, controls are in place at present to prevent a repeat of the overcharging. The final remediation amount, however, is still being determined.
A spokesperson for Vero told Insurance Business: “We are continuing to work through our process of identifying affected customers and calculating refunds where they are due.
“To date, we have been communicating with customers we have identified as affected and already remediated almost 50,000 customers. We are working with our brokers to contact any remaining customers, including those that we have not yet been able to contact.”
As the process remains in motion, it’s unclear at this point how much of the impacted policyholders, in terms of percentage, have already been offered apologies and given the necessary reimbursements. Vero, however, said “the vast majority” of affected customers have been remediated.
“Where we have been able to identify and quantify an impact to customers, we have endeavoured to remediate those customers,” the Vero spokesperson went on to tell Insurance Business, in addition to an earlier pronouncement by chief executive Jimmy Higgins.
“Our priority is to make it right for affected customers, whether they still have a policy with us or not. This has included remediating some customers from as far back as 2009.”
Higgins, in a separate statement, apologised for the “unacceptable” issue, which Vero noted has since been curbed, without elaborating further.
Meanwhile, as an insurer that relies on the broker channel to distribute its products, Vero cited the role of the firm’s broking partners in the whole remediation effort.
“Vero is a fully intermediated business, and any errors we have made need to be remediated in partnership with those businesses,” declared the spokesperson. “As such, we are reliant on the ongoing cooperation and support of our intermediaries in remediating these issues.
“We will continue to work with our brokers and partners to identify and fix any issues affecting our customers and are committed to ensuring that impacted customers are compensated.”
The company representative continued: “Insurance is a complex business; systems and process errors happen. Identifying errors and putting them right are a part of doing business – when this happens, what is important is that we make things right.”
As for the possible fine against Vero, no estimate was provided. In September, the Auckland High Court ordered a pecuniary penalty worth $700,000 in the FMA’s case versus life insurer AIA, which was found to have been in violation of the FMC Act. The figure was the sum agreed upon by both camps, and was not altered by the High Court.
