New Zealand Financial Markets Authority accepts FMG enforceable undertaking with NZD 2.1 million payment over misleading insurance representations

New Zealand Financial Markets Authority has accepted an enforceable undertaking from FMG Insurance Limited and Farmers’ Mutual Group after the insurer admitted breaching the fair dealing provisions of the Financial Markets Conduct Act by making false or misleading representations in relation to certain insurance products. FMG agreed to pay NZD 2.1 million in lieu of a pecuniary penalty and to remediate affected customers. The investigation, prompted by FMG’s self-report, focused on two issues. First, between 2012 and 2024 some Household Contents customers were charged additional premiums for specified items that were already covered under the general contents sum insured, meaning the specification provided no additional insurance benefit. Between 1 April 2014 and 2024, 3,904 customers were affected and have been paid about NZD 1.936 million in remediation for overcharged premiums (including GST and use of money interest), alongside five claim top-up payments totalling about NZD 6,000; FMG admitted breaches of sections 22(d) and 22(g). Second, between 2013 and 2024 FMG applied annual flat rate increases to certain customers’ sums insured even where policies suggested inflation-based adjustments or no longer contained an inflation clause, resulting in tens of thousands of customers being over or undercharged; 54,642 customers were affected between 1 April 2014 and 2024, with around 26,000 due refunds and 480 receiving claim top-ups, and remediation totalling about NZD 3.38 million (including GST and use of money interest). FMG also admitted that renewal statements claiming inflation adjustments had been applied in accordance with policy terms were false or misleading, breaching sections 22(d), 22(f) and 22(h). Under the undertaking, FMG committed to strengthen its systems and rewrite policy wording to prevent recurrence.