Vero to pay $3.9 million penalty for making false and misleading representations to customers about multi-policy discounts

The Auckland High Court has ordered Vero Insurance New Zealand Limited (Vero) to pay a penalty of $3.9 million for failing to apply multi-policy discounts to customers, following proceedings brought by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko.

In June 2023, Vero admitted it breached section 22, one of the Fair Dealing provisions of the Financial Markets Conduct Act (FMC Act), by not applying multi-policy discounts to some customers who were entitled to them. At the penalty hearing this week, his Honour Justice Venning declared Vero breached section 22 of the FMC Act and imposed a pecuniary penalty with a starting point of $6 million, a discount of 35% and a final penalty of $3.9 million.

Justice Venning stated Vero failed to carry out a key aspect of its bargain with its customers, which was to charge customers the right amount, and that no adequate explanation for its failure not to have detected the issue earlier had been given. His Honour accepted that the relationship between customers and Vero is one of trust.

FMA Head of Enforcement Margot Gatland said: “This penalty is the largest the FMA has secured in a case of this kind which reflects the seriousness of the deficiencies in Vero’s systems that affected many customers over a prolonged period. It reinforces the importance to firms of the need to invest properly in systems that deliver benefits promised to customers and should remind the industry that financial institutions will be held to account if they fail to sufficiently invest in systems, controls and processes that ensure all customers are treated fairly.”


The false and/or misleading statements were made in periodic invoices issued to affected customers in relation to house and contents, vehicle and boat insurance. Multi-policy discounts apply when a customer has more than one risk or cover insured under one policy, or under multiple policies.

Between April 2014 and May 2022* Vero and its intermediaries issued the invoices to approximately 42,000 affected customers and effectively overcharged $9.9 million in premiums because of the issue.

Vero failed to apply the discounts due to errors and deficiencies in its systems, including data entry errors by Vero employees and some intermediaries (which sold the policies on behalf of Vero). Liability primarily rests with Vero as it designed, owned and maintained the systems at fault. It was accepted by Vero that, pursuant to section 536 of the FMC Act, the conduct of intermediaries that were acting on behalf of Vero in issuing affected invoices is treated as conduct that is also engaged in by Vero.

Vero reported the issue to the FMA in December 2019, at which time its remediation programme had been underway for some months. However, Vero had not fully reviewed all affected intermediary channels, so the FMA requested the insurer undertake a full investigation and remediation plan. Vero subsequently discovered an even greater number of affected customers.

Vero has reimbursed $13.97 million in overcharges to affected policyholders. Vero has also paid $95,845 to charities where affected customers could not be reached or did not respond to contact from Vero.

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