Media Release
MR No. 2025 – 42
Insurance company IAG New Zealand Limited has admitted to fair dealing breaches and the Court has imposed a final pecuniary penalty of $19,500,000.
Following an investigation by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko - IAG has admitted making false and/or misleading representations in relation to its insurance products.
FMA Executive Director, Response and Enforcement Louise Unger said: “The nature and scale of IAG’s contraventions was greater than those present in any other fair dealing case the FMA has to date taken to Court, and the judgment confirms they warrant a significant penalty.
“IAG is New Zealand’s largest insurer. It is a large and sophisticated market leader and accordingly plays a vital role in upholding market standards, yet its significant underinvestment led to widespread failures of its systems and processes, to the detriment of its customers. It also failed to respond to and report many of the issues in an appropriate timeframe.”
Justice Andrew found that “nature and extent of IAG’s contraventions to be the most aggravating feature of its conduct” and that the “penalty must be set at a level that sends a clear message to the financial market – and particularly similarly large and well-resourced institutions – as to the importance of investing in robust systems and making good on the promises to customers”. His Honour also observed that “IAG’s knowledge of the breaches and the delay in reporting them to the FMA, particularly following the culture and conduct review, is an aggravating factor”.
The penalty reflects discounts for IAG’s self-reporting, its early offer of admissions, its exemplary cooperation with the FMA’s investigation, and the steps taken to remediate its customers.
IAG breached the Financial Markets Conduct Act (FMCA) by failing to correctly price the premiums charged to customers, and by failing to correctly apply important discounts to its insurance products sold via its business divisions and distribution partners.
Between September 2021 and December 2024, IAG self-reported 41 issues to the FMA. of which ten of the most significant (and earlier reported) issues were pleaded as eight causes of action against IAG.
The breaches to which IAG has admitted affected approximately 269,000 customers and resulted in overcharges of approximately $35,000,000. The remaining 31 issues, which involve an estimated total remediation of $21 million, did not form part of the pleaded claim, however, they are recorded in a schedule to it and provide crucial context to IAG’s conduct.
“The penalty has been set at a level that sends a clear message to the financial market – and particularly similarly large and well-resourced institutions – as to the importance of investing in robust systems and making good on the promises made to customers,” said Louise Unger.
“We will continue to respond to misleading practices to ensure New Zealand has a fair financial system.”
FMA files civil proceedings against IAG for fair dealing breaches
Financial Markets Authority v IAG New Zealand Ltd [2025] NZHC 2908 - Judgment [PDF 289KB]
ENDS
Media contact:
Ellie Martel
FMA Senior Adviser, Media Relations
[email protected]
021 241 7868
