Half a minute to trim premiums by 35pc

Within 30 seconds an independent insurance adviser had identified how Dion Knill could trim 30 per cent off his life insurance premiums without reducing his cover.

Knill had been sold his Sovereign life and income protection insurance policies by ASB in 2001, but he sought independent advice after his premiums rose 35 per cent in a single year.

‘‘ASB received commission initially on this policy, and have been receiving annual commissions on the basis of providing advice and ensuring the policy and rates were the best for me,’’ Knill said.

‘‘Despite this I have just discovered ASB have not been advising or applying the significant discounts. These discounts for me are over $1600 per year.’’

The savings came from applying a multi-policy discount, which he had not been getting, and by joining the Vitality health scheme run by AIA, which bought Sovereign from ASB’s parent company in 2017 in a $4.15 billion deal and took over its policies.

‘‘In the last 87 days I have received about $100 in [Air New Zealand] Airpoints, and 15 per cent off my insurance premiums [through the Vitality scheme], and I will keep saving money based on my fitness levels,’’ Knill said.

‘‘None of this stuff has been pointed out to me over the last three or four years.’’

ASB said staff would contact insurance customers personally, and had identified some insurance customers who had not been getting the multi-policy discounts they were entitled to.

Knill complained to ASB in August, but the bank denied it had done anything wrong, telling him that every year it sent him a letter, offering for him to call his broker for a review.

Knill said those letters led him to believe the bank was reviewing his cover each year, telling him he had ‘‘the best cover possible’’ and that it was ‘‘competitively priced’’. He decided to check out the offer of a review, and called the number of the ‘‘broker’’ named in ASB’s latest letter.

‘‘I rang that number and the number had been disconnected for quite some time. So I rang ASB, and they had never heard of the guy,’’ he said. ‘‘I thought, this is odd.’’

AIA didn’t know who he was either, Knill said. ‘‘This guy does not exist. He’s probably the guy who signed my insurance contract 20 years ago. He’s probably dead.’’

He decided to share his story to encourage other ASB customers to seek independent advice.

An ASB spokeswoman said the bank received commissions on insurance it sold.

But it had been changing the way it dealt with customers, she said. ‘‘Earlier this year we set up a new team of insurance managers to further personalise the service we provide.’’ Their job was to contact existing life insurance customers to discuss the suitability of their cover, she said.

Following conduct and culture reviews by regulators in 2018 and 2019, banks and insurers have been identifying failures that led to failures to follow the law, overcharging, and customers being sold poorvalue insurance.

All the big banks, ASB included, have put in place ‘‘remediation’’ programmes to compensate customers.

ASB said it had found an issue whereby some general insurance customers who were eligible for a multi-policy discount did not receive it. The bank was working with its provider, AIG, to resolve the issue.

The Financial Markets Authority said it did not comment on individual cases, but ‘‘where a commission or a premium is being charged with an advice component then it is expected that the advice will be given, not just offered’’.

The Conduct of Financial Institutions Bill is expected to pass into law next year. Under the bill, banks and insurers would be required to comply with a fair conduct principle to treat consumers fairly.

They would need a fair conduct programme showing how they did this, though some have told the Government they would like to keep these secret from customers, including AIA.