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- Southern Cross Travel Insurance pays $1.1m penalty for rule breaches
- Company failed to deliver promised discounts worth $3.5m
- Latest insurance company to fall foul of discount rules
The country's biggest travel insurer, Southern Cross, has paid a penalty of $1.1 million for misleading consumers about discounts.
The company struck a deal with the Financial Markets Authority (FMA) after admitting that it did not apply the discounts as promised, shortchanging purchasers by $3.5m.
The agreement was an enforceable undertaking, meaning the FMA can take action if the deal is not fulfilled.
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.
Purchasers were told the discounts would apply to their entire premiums, but in the end were applied only to base premiums.
The FMA said Southern Cross had intended to only apply discounts to the base premiums but that was not clearly told to customers.
The authority's head of enforcement Margot Gatland said insurance companies need to deliver what they promise.
"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," Gatland said.
Southern Cross is the latest insurance concern to be caught for misapplying discounts.
