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Like other insurers Southern Cross has been pinged for not applying discounts because of systems issues.
However, the quantum of the errors was small enough to warrant a public warning rather than legal action.
The errors related to its health and pet insurance businesses.
The FMA says Southern Cross Medical Care Society (SCMCS) failed to correctly apply the following discounts:
The total amount of SCPI premiums overcharged was $424,508, affecting 7,542 customers, or 1.28% of its customer base. SCMCS overcharged $161,547 across 1,957 customers, or 0.2% of its customer base.
FMA Director of Specialist Supervision Peter Taylor said: “The FMA considers that making this warning public is proportionate considering a range of factors. The FMA has considered the level of harm caused and that both entities have repaid most of their customers."
"They cooperated proactively with the FMA and there is no evidence of any deliberate misconduct. Yet, the entities failed to apply the promised discounts over a prolonged period, in SCMCS’s case some 17 years.
“The FMA considers the wider Southern Cross Group did not provide adequate information to its customers when it publicly acknowledged the issues concerning its failure to properly apply the discounts. The FMA expects entities to have better systems and controls in place to identify and prevent issues as early as possible and to be transparent with customers when problems arise.”
Both entities have completed remediation programmes
Southern Cross Pet Insurance (SCPI) failed to correctly apply the following discounts:
The total amount of SCPI premiums overcharged was $424,508, affecting 7,542 customers, or 1.28% of its customer base.
"The FMA is satisfied, and both entities accept, that they breached the fair dealing provisions of the Financial Markets Conduct Act by making false or misleading representations. The representations relate to the failure on each entities’ part to correctly apply advertised discounts to affected customers’ invoices, resulting in overcharged premiums. The FMA determined that the cause of each issue was due to poor controls and/or technical errors."
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From what I have observed, the one part of the Southern Cross machine that is solid and consistent are its systems. And they should be given the sheer number of policies and people they have on their books.