Tower discount remediation costs rise, CEO apologises
New Zealand insurer Tower says costs associated with refunds to customers who didn’t receive correct multi-policy discounts are now expected to reach about $NZ11.2 million ($10.3 million), excluding goods and services tax.
The figure, an increase from $NZ6.2 million ($5.7 million) at the half year, takes into account repayments to around 65,000 customers and includes an estimate of a regulatory penalty from potential enforcement action.
“Tower is focused on putting things right for customers who have received incorrect discounts extending back to 2016. We sincerely apologise to those who have been affected,” CEO Blair Turnbull said today.
“We are redesigning and simplifying our multi-policy offering and expect to share more about this change in the coming year.”
The insurer says it self-reported the matter to the Financial Markets Authority (FMA), leading to an investigation by the regulator, and it will keep the market updated on related developments.
Tower referred to the issue at its fiscal 2022 results, advising of an after-tax provision of $NZ2.6 million ($2.4 million) for remediation arising from an error in the calculation of multi-policy discounts. It said at that time that it had advised the FMA and expected to begin processing refunds last December.
The update today says the company has made substantial progress in refunding customers who did not receive their correct discounts, with $NZ6.2 million ($5.7 million) excluding GST paid as of October 31.
The company, which will release financial results for the year ended September 30 on Thursday next week, says the underlying profit guidance for fiscal 2023 remains unchanged.
Last month, the Auckland High Court penalised Vero New Zealand $NZ3.9 million ($3.6 million) over broken multi-policy discount promises made to thousands of customers.
Vero self-reported the matter in December 2019 to the FMA, leading to further investigations and the regulator lodging proceedings.