New Zealand travel insurer Southern Cross Benefits has paid $NZ1.1 million ($1.01 million) to the Crown after admitting breaches of fair dealing laws.

The company, trading as Southern Cross Travel Insurance, offered discounts on cover if customers bought online or used promotion codes. It also offered discounts to Southern Cross Medical Care Society members.

The Financial Markets Authority says statements on the insurer’s website and emails to customers suggested discounts would be applied to the entire premium, but they were in fact only applied to base premiums.

Southern Cross intended the discounts to apply to base premiums, but its communications did not communicate this clearly.

The difference in discounts totalled $NZ3.5 million ($3.2 million), which Southern Cross has paid customers.

FMA head of enforcement Margot Gatland says the $NZ1.1 million payment under an enforceable undertaking “confirms that insurers are required to ensure representations they make to customers about potential discounts can be delivered, and that customers are treated fairly”.

Southern Cross Travel Insurance interim CEO Anita Hawthorne says the business identified the issue in 2023 and self-reported to the FMA.

“We contacted affected customers to apologise, paid refunds and have strengthened our processes to ensure this doesn’t happen again,” she said.  

In March last year, the FMA warned other Southern Cross entities about failure to apply advertised discounts on pet insurance and other products.