Summarised by Centrist
General insurer Tower is scrapping its multi-policy discounts, citing unacceptable risk of miscalculating the benefit and running afoul of regulatory rules.
Chief executive Paul Johnston said the company had tried to fix its systems but couldn’t guarantee accuracy. “That’s not good enough,” he said in a statement to the NZX.
The discounts had offered customers up to 20% off for holding multiple policies with Tower. But despite upgrades, the insurer said it still couldn’t ensure customers were getting the correct rates.
The changes will kick in by year’s end, starting with new policies. Existing customers will lose their discounts at renewal.
Tower’s move follows similar decisions by AMI, State, and AA Insurance, and comes after past legal action where insurers were penalised for failing to apply or miscalculating such discounts. Tower was among those found at fault.
“There’s a real risk policyholders will end up underinsured or drop insurance completely,” said Rebecca Styles, who leads investigations at the watchdog group Consumer NZ. Many who drop insurance do so because of cost, she said.
Styles noted the only upside is that customers no longer need to be loyal to a provider that offers nothing in return. But switching is hard work. “We encourage people to shop around, increase their excess, and ask their insurer directly how to bring costs down.”
