Insurance Council will consider ousting Youi over misleading sales techniques

Friday 12th August 2016

The board of the Insurance Council of New Zealand will next month consider terminating the membership of South African-owned insurer Youi NZ after it agreed to plead guilty to 15 charges relating to misleading sales practices.

The council is disappointed with the actions and processes at Youi which have led to the Commerce Commission laying charges in the Auckland District Court, council chief executive Tim Grafton said in a statement.

The antitrust regulator said yesterday 15 charges under the Fair Treading Act had been laid against the local unit of the South African insurer, claiming Youi made misleading representations on its website over customers' ability to get a quote, during sales calls including telling clients they had to provide bank or credit card details, asserting a right to payment for unsolicited policies, and sending invoices to unsolicited customers without telling them they had no obligation to pay.

It follows a spate of customer complaints to the commission in the period between March 2015 and February this year though the actual misrepresentation charges filed in court date back to July 2014, which is the year Youi launched in New Zealand offering home, contents, and vehicle insurance.

Youi has told the Insurance Council that it “speedily implemented” all required changes to business practices to strengthen its compliance and to address these issues that were "not part of its standard operating procedures”.

It acknowledged the validity of customer complaints relating to instances where policies were sold when only quotes were requested, and the failure to cancel insurance policies after being notified.

Grafton said the matter will be considered by the ICNZ board which meets next month and whether the charges have impacted negatively on the reputation of the insurance industry.

"Depending on its findings, the board may choose no further action, reprimand the member, order that the member pay a financial penalty, or terminate the member’s membership of ICNZ," he said.

Membership of the council, which self-regulates fire and general insurances, requires members to be licensed under the Insurance (Prudential Supervision Act) 2010 and signatories to the Fair Insurance Code that requires them to act ethically.

The council is understood to have never kicked out any members before based on reputational reasons. It currently has 28 members which write the substantial majority of New Zealand’s insurance business, paying out $2.25 billion in claims in 2014.

The Commerce Commission completed an investigation into Youi’s sales techniques earlier this year. As the matter is still before the court, the commission said it couldn’t comment further at this time.

BusinessDesk.co.nz

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