Tower Insurance Fined $7m for Misleading Customers Over Multi-Policy Discounts

Tower Insurance has been hit with a $7 million penalty after the High Court in Auckland found. The company misled customers about multi-policy discounts. Resulting in more than $11 million in overcharges.

The fine follows Tower’s admissions in civil proceedings brought by the Financial Markets Authority (FMA), which accused the insurer of making false or misleading representations over several years.

What Tower Did Wrong

According to the FMA, Tower repeatedly claimed that customers holding multiple policies would automatically receive a discount. In reality, thousands of eligible customers never received the promised benefits.

The issue affected policies across home, contents, vehicle and other insurance products. Some customers were incorrectly charged for years, adding up to over $11m in excess premiums.

The High Court found Tower’s conduct breached fair dealing obligations under financial markets law. The insurer accepted it had failed to meet its responsibilities.

Refunds Issued — But Accountability Still Matters

Tower has since refunded affected customers, but the Court emphasised that a significant penalty was needed to deter future misconduct — both by Tower and across the wider insurance sector.

The FMA said the case highlights the importance of transparency, particularly in the insurance industry where consumers rely on providers to apply discounts and pricing correctly.

“Customers should not have to chase their insurer to get what was promised,” the FMA said following the judgment.

Tower Responds

Tower acknowledged the ruling and apologised for the errors, describing them as unintentional system and process failures. The company said it has since implemented new controls to prevent similar issues in future.

However, the FMA noted that whether intentional or not, the impact on consumers was significant — and accountability was essential.

A Warning to the Industry

The case sends a strong message across New Zealand’s insurance and financial services sectors: inaccurate pricing, misleading statements, and failure to honour advertised discounts will not be tolerated.

For thousands of Tower customers, the ruling brings long-overdue clarity — and for the industry, a reminder that fairness and accuracy are not optional.