Medical Assurance Society fined $2.1m for overcharging customers

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Health insurance company, the Medical Assurance Society, has been fined $2.1 million for overcharging thousands of customers.

The Financial Markets Authority (FMA) took legal action against the company for breaches of fair dealing rules, and making false and misleading statements to consumers.

The company admitted the breaches, which it reported itself between 2019 and 2022, with one of the issues coming to light in a review by the FMA and Reserve Bank.

Between 2014 and 2022, the company effectively overcharged customers more than $6.1m by not applying the correct discounts for multi-policy customers and no claims bonuses, and making incorrect inflation adjustments.

Affected customers have now been reimbursed.

Financial Markets Authority head of enforcement Margot Gatland said the breaches were widespread across the insurance group, because of fundamental flaws in its systems.

“The issues caused considerable harm to a significant number of MAS’s customers, being more than 16,000 across all issues, and the harm caused by the benefits payment issue affected customers who were at particularly vulnerable times in their lives.

“While a relatively small insurer by market standards, the net gain MAS made from its breaches was significant,” Gatland said.

The penalty was reduced by about a third from the $3m starting point.

The company had known about the overcharging since 2014, but did not investigate until it was rediscovered in 2019.