Southern Cross Benefits Limited, trading as Southern Cross Travel Insurance, has agreed to pay $1,105,000 to the New Zealand Crown after admitting to breaches of fair dealing provisions under the Financial Markets Conduct Act 2013.
The payment follows an investigation by the Financial Markets Authority (FMA) into how the insurer communicated discounts to its customers.
The FMA’s inquiry found that Southern Cross Travel Insurance’s website and customer communications described discounts as applying to the entire insurance premium.
In reality, these discounts were only calculated on the base premium, not on the total amount paid by customers.
The company’s intention was for the discounts to be limited to the base premium, but this was not clearly conveyed in its marketing or policy information.
The discounts at issue included those offered to Southern Cross Medical Care Society members, for online policy purchases, and through specific promotional codes.
The FMA determined that the way these offers were presented led customers to believe they would receive a greater reduction than was actually provided.
The difference between the discounts customers received and those they expected, had the discount applied to the full premium, totalled $3,501,221.
Southern Cross Travel Insurance has since taken steps to address the matter, including providing an enforceable undertaking to the FMA and fully compensating affected customers.
The company acknowledged that its communications did not accurately reflect how discounts would be applied.
FMA head of enforcement Margot Gatland said the outcome highlights the need for insurers to ensure their representations about discounts are clear and can be delivered as described.
“We encourage people to check their insurance documents and complain if they are not paying the correct premiums,” she said.
The FMA recently released its Statement of Performance Expectations (SPE) for 2025/26, outlining its regulatory focus for the year ahead.
The SPE supports the authority’s longer-term strategy and details how it will oversee financial markets, including the insurance industry.
Key performance measures in the SPE include targets for investigation timelines, licensing efficiency, and stakeholder engagement.
The FMA aims to complete most high-priority investigations within two years and process licence applications within 60 working days.
The authority will also monitor stakeholder satisfaction with its licensing systems and aims to increase its digital engagement by 5% over the previous year.
