Financial Markets Authority warns people to complain if they're not paying the correct premiums as Southern Cross Travel Insurance admits liability for breaches of fair dealing laws, pays $1.1 million to Crown

The country’s financial markets regulator is encouraging people to check their insurance documents and to make complaints if they are not paying the correct premiums.

This comes as Southern Cross Benefits Limited, trading as Southern Cross Travel Insurance, has admitted liability for breaches of fair dealing laws and paid $1,105,000 to the Crown.

The Financial Markets Authority (FMA) says "the payment is made in lieu of a pecuniary penalty in respect of contraventions relating to misleading representations made by Southern Cross Benefits when it was offering Southern Cross Travel Insurance discounts to prospective customers".

Customers were offered discounts for being a member of Southern Cross Medical Care Society, for buying Southern Cross Travel Insurance policy online and for buying a Southern Cross Travel Insurance policy using certain promotion codes, the FMA says. 

“While statements on the Southern Cross Travel Insurance website and emails to customers represented that discounts would be applied to customers’ entire premiums, the discounts were only applied to base premiums."

Base premiums are part of your entire premium - it is calculated by your insurer to reflect the cover provided. It’s the overall costs before levies and GST are added.

“Southern Cross Travel Insurance had intended that the discounts would only apply to base premiums but their communications to customers did not clearly communicate this."

The FMA says the difference between the discounts the customers received and the discounts they would have received if it was applied to their entire premiums was $3,501,221.

The FMA’s head of enforcement Margot Gatland says “this 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”.

The FMA acknowledged the insurer’s cooperation during the investigation and Southern Cross Travel Insurance has fully remediated customers who were impacted by the discounts.