Media Release
MR No. 2023 – 19
The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - has filed High Court proceedings against Medical Assurance Society New Zealand Limited (MAS) and its subsidiaries for fair dealing breaches under section 22 of the Financial Markets Conduct Act 2013 (FMC Act).
The FMA claims that between 2014 and 2022*, MAS failed to apply the correct inflation adjustments on its customer policies, failed to apply multi-policy discounts and no claims bonuses, and underpaid life and disability claims to eligible clients.
In particular, the FMA alleges:
- MAS applied an inflation adjustment of 3%, instead of the inflation adjustment specified in policies of customers who had elected to receive an inflation adjustment. This issue affected approximately 6,267 customers, with approximately $1,741,631 in overcharged premiums. MAS has reimbursed $780,501** to the affected customers.
- MAS did not apply the multi-policy discount or incorrectly applied a lower rate of the discount to premiums owed by some eligible customers. This issue affected approximately 8,864 customers, with approximately $3,318,997 in overcharged premiums. MAS has reimbursed $3,885,249** to the affected customers.
- MAS made various errors when manually calculating a customer’s benefit payments. These errors resulted in some customers receiving lower benefit payments than they otherwise would have if the errors had not occurred. This issue affected approximately 104 customers, with approximately $1,047,059 in underpayments. MAS has reimbursed $1,160,638** to the affected customers.
- MAS did not apply the correct no claims bonus grade to premiums owed by some eligible customers. This issue affected approximately 1,235 customers, with approximately $572,061 in overcharged premiums. MAS has reimbursed $639,821** to the affected customers.
The FMA alleges MAS’s failures were due to errors and deficiencies in its systems, including data entry errors by MAS employees.
MAS self-reported the issues listed above to the FMA between 2019 and 2022, including reporting one of the issues as part of the FMA and Reserve Bank of New Zealand’s Conduct and Culture reviews.
The FMA acknowledges that MAS has been cooperative with the regulator through its investigation since disclosing the issues. The FMA is seeking a declaration that MAS contravened the FMC Act and a pecuniary penalty. The proceedings were filed at the High Court in Wellington.
ENDS
Notes
*At least one issue dates back to 2009 but the FMA’s claim only applies to MAS’s conduct from April 2014 onwards, which is the date the FMC Act came into force.
**The figures were the amount reimbursed to affected clients at the time the FMA filed its claim.
Subsidiaries refers to Medical Life Assurance Society Limited (MLA) and Medical Insurance Society Limited (MIS) which are wholly owned subsidiaries of Medical Assurance Society New Zealand Limited – the ultimate holding company of a group of companies trading as MAS.
Media contacts:
Andrew Park
FMA Media Relations Manager
[email protected]
021 220 6770
Matt Chatterton
FMA Senior Adviser, Media Relations
[email protected]
021 241 7868
