Earlier this month Youi, whose advertising tagline is "We Get You," was fined $100,000 by industry body, the Insurance Council, which had also considered the unprecedented move of kicking the insurer out of the group.
South African-owned insurer Youi NZ expects to pay a $350,000 fine for breaking the law with misleading sales tactics.
In August, the Auckland-based unit of the insurer pleaded guilty to 15 representative charges brought against it by the Commerce Commission after an investigation followig complaints where policies were sold when only quotes were requested and failure to cancel insurance policies after being notified. The Fair Trading Act holds a maximum penalty of $600,000 for a company but Youi has provided for just over half that in its 2016 accounts filed with the Companies Office.
"The NZ Commerce Commission has filed charges against the company under the Fair Trading Act," the accounts said. "Provision has been made for a penalty that may be payable as a result of these charges."
The charges included making misleading representations on its website over customers' ability to get a quote, during sales calls including telling clients they had to provide bank or credit card details, asserting a right to payment for unsolicited policies, and sending invoices for insurance policies to unsolicited customers without telling them they had no obligation to pay.
Earlier this month Youi, whose advertising tagline is "We Get You," was fined $100,000 by industry body, the Insurance Council, which had also considered the unprecedented move of kicking the insurer out of the group. It has been operating in New Zealand since July 2014.
The insurer went through rapid growth in the latest financial year, boosting premium revenue to $26.2 million in the 12 months ended June 30 from just $5 million a year earlier, while insurance claims climbed to $19.4 million from $4.2 million. Youi's accounts show it reaped $161,000 from policy cancellation fees, up from $36,000 a year earlier.
The company reported a net loss of $11.1 million in the year compared to a loss of $14.8 million in 2015, with the directors saying "this business is in start-up phase and there is no reason to believe that the business will not be able to recover these losses from its future operations."
Youi's wage bill rose to $23.8 million from $21.5 million, while its KiwiSaver expenses advanced to $513,000 from $461,000. The insurer received $39,000 in Work and Income New Zealand subsidies aimed at getting people into work who are most at risk of getting stuck on a benefit, up from $21,000 in 2015.
In June, the Ministry of Social Development said Youi was no longer getting the subsidy.
(BusinessDesk)
