Background
Between June 2022 and January 2023, Cigna Life Insurance New Zealand Limited was subject to regulatory enforcement action concerning breaches of the fair dealing provisions of the Financial Markets Conduct Act 2013 (FMCA/FMC Act), relating primarily to the communication and application of inflation adjustments on certain insurance products.
In June 2022, OnePath Life (NZ) Limited and Cigna Life Insurance New Zealand Limited jointly paid a pecuniary penalty of $180,000 after admitting liability for fair dealing breaches associated with credit card repayment insurance. This enforcement action reflected deficiencies in how customers were treated and informed under the FMCA.
Subsequently, in August 2022, proceedings were filed in the Wellington High Court alleging that Cigna Life Insurance New Zealand Limited breached the fair dealing provisions of the FMC Act in its communications with customers regarding inflation-related increases to premiums and insurance cover. The case related to 52,363 policies and focused on false and/or misleading representations made to policyholders about the nature and impact of inflation adjustments.
The matter concluded in January 2023 when the Wellington High Court ordered Cigna Life Insurance New Zealand Limited to pay a final pecuniary penalty of $3,575,000. The Court’s decision followed agreement between the parties to settle all matters arising from the investigation under a formal settlement agreement. The penalty reflected the seriousness of the misleading representations and their impact on a large number of customers.
Overall, the case underscores the regulatory expectation that financial service providers must communicate transparently and accurately with customers, particularly in relation to pricing and benefit adjustments, and demonstrates the significant financial and reputational consequences of failing to meet fair dealing obligations under the FMCA.
