IAG rectifies home cover error
20 September 2012
State insurance owner IAG and the Commerce Commission have reached a settlement agreement in relation to potential breaches of the Fair Trading Act as a result of the incorrect annual inflation adjustments being applied to sums insured on certain home and contents insurance policies.
This issue only affects certain home and contents policies within the State.
IAG identified the error in August last year, notified the Commerce Commission in October, and has been working through a programme to identify and make direct contact with all impacted customers.
The company’s head of corporate affairs, Craig Dowling, says the error is regretted, customers have been or are being contacted directly, and every effort is being made to put things right.
“All State customers have visibility of their sum insured at the time of annual renewal of their policies, but that doesn’t change the fact that some policies should have shown higher levels of increase each year.”
As at the end of August, 538 customers who had received past payouts to their policy maximums had their claims reviewed, and 198 of those received additional payouts including interest totalling around $1.35m.
A further $626,000 is allocated to another 105 historic claims that are being reviewed.
There are 130 current or active claims for which IAG estimates between $1m and $1.5 in additional payments will be made based on the corrected sum insured amounts.
State has corrected the indexation rates so that its systems now correctly calculate the adjustment in the manner required.
Around 150,000 customers will receive letters during their annual renewal cycle adjusting their policy and premium to the corrected levels.