Insurer Youi punished by industry body

by Maryvonne Gray 04 Oct 2016

Insurer Youi punished by industry body

The Insurance Council of New Zealand (ICNZ) has fined direct insurer Youi a penalty of $100,000, it has been announced this morning.

Following a disciplinary process, the ICNZ Board decided on imposing a financial penalty but warned Youi that any future misconduct risked their membership being terminated.

The financial penalty would be directed towards funding initiatives that improve consumers’ financial capability, ICNZ said.

The Board found Youi had breached the ICNZ rule which specifically requires ICNZ members to conduct their business in accordance with the Fair Insurance Code and in a legal, honourable and proper manner.

Youi pleaded guilty in the Auckland District Court to 15 representative charges brought against it by the Commerce Commission.

These charges included:

-           making false or misleading statements on its website regarding consumers’ ability to obtain a quote online;

-           making false or misleading statements to consumers including telling them their bank or credit card details were required to provide a quote;

-           demanding payment or debiting consumers’ bank or credit cards without their expressed permission; and

-           issuing invoices in relation to unsolicited insurance policies that did not specify the consumer was under no obligation to pay.

ICNZ president Chris Black said the ICNZ set high industry standards for all members to follow.

Youi’s business conduct has fallen well short of this expectation,” he said in a statement today.

“ICNZ has put significant effort into improving the reputation of the insurance industry.

“It has changed its Objects to that end and made significant changes to strengthen its Fair Insurance Code to raise the standards of service to consumers,” Black said.

Youi had accepted its actions were in breach of its membership obligations and had damaged the reputation of the industry, ICNZ said.

Black explained why the Board had stopped short of expelling the insurer from the Council.

“The Board considered the most severe sanction it could impose – termination of Youi’s membership of ICNZ – but decided on a severe reprimand, the maximum financial penalty allowable and a warning that a recurrence would lead to termination.”

Black said the Board took the following factors into account in order to reach this decision:

-           Youi’s restoration of harm and unreserved apology to those customers affected

-           Youi’s action in reviewing and changing its systems, processes and monitoring to prevent a recurrence

-           absence of any previous misconduct

-           Youi’s remorse and acceptance of the sanction being imposed.

-           Youi’s co-operation with the Commerce Commission and voluntarily keeping ICNZ’s Board informed of the Commission’s investigation

-           the benefits of keeping Youi compliant with the high service standards set by the Fair Insurance Code as a member of ICNZ    

-           Youi’s active contribution to the workings of ICNZ. 
 
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