Recorded $3.5m fine: ‘Gobbledygook’ found when asking prices

A life insurance agent says a recent fine indicates that companies need to improve communication about how premiums are raised.

From the beginning of 2013 until the beginning of 2019, Cigna increased the sales and installation under the benefits index.
on different principles.

According to the client, the case showed how much transparency is needed about data.

Cigna was fined $3.575 million in the High Court in Wellington this week, due to information relating to the cost benefits of products in some life insurance companies.

The Financial Markets Authority (FMA) and Cigna agreed that there was no intent to mislead consumers, and Cigna reported the matter to the FMA.

When Cigna increased some of the premiums and included them under the index benefits, they used rates that were higher than the Consumer Price Index, which was not consistent with the criteria contained in the sales process.

The Cigna customer said the life insurer couldn’t give him a reasonable answer when he first questioned the price increase.

He said he received confusing information about whether his policy was related to the court.

“I used to ask why I was affected by this data series and why they forced me,” the Cigna customer told the Broadcast.

“They said ‘no, that’s the law and that’s what’s going to happen’.”

He asked not to be named because his government department boss discouraged workers from talking to the media.

“My wife and I have two life insurance policies. Since we invested in our building, this is an encouraging situation,” he said.

“I have a young family and I can’t afford the insurance but we have to get it … I just bit the bullet and went for it. They kept increasing the number,” he added.

“We made a monthly payment and spent a lot of money on insurance.”

He said all guidelines should be revisited, and more clarity is needed for policyholders and the industry.

He added: “It’s something that can’t be seen at the moment and we have to be right in using the price review. We’re paying for this for the rest of our lives.”

She said she’s been with Cigna since 2019. The couple spends up to $457 a month on insurance, and she recently asked Cigna about related issues. there.

“They used different percentages of referrals for me and my wife, and they gave me some gobbledygook because of Covid, some referrals didn’t (proliferate).”

A Cigna spokeswoman said any customer with questions about identity or litigation issues should contact Cigna and use “identity” as a reference.

“The details of the recovery were shared with the FMA, which expressed our cooperation in this matter and it is not our intention to mislead consumers,” he added.

“More than three to four customers contacted by the company have decided to keep their index ads.”

A spokesperson for the FMA said that by law, government financial penalties from the Cigna case go to the Crown. The Financial Market Conduct Act dictated how fines were paid.

In practice, the financial penalty is paid first to the FMA. Then the costs of the administrative staff are set aside, while the rest goes to the Government.

According to the FMA, companies in such situations often take steps to pay customers, especially when the companies admit they are breaking the law.

“If they don’t do it, the court can order that it is not the FMA or someone else who is looking for it,” added the FMA.

Cigna reported the issue in February 2019. A remediation program began seven months later.

As of early August last year, Cigna had reimbursed $10.8 million in additional costs to customers through the recovery program.

Cigna said that it will not appeal the trial or the sentence of Judge Jillian Mallon, so the trial was closed.