Inflation error specific questions
During a review of our policy processes, we discovered an error affecting life and disability income policies that were renewed between 2008 and 2021, depending on the policy and cover types.
Each of these policies is adjusted for inflation every year but our review found the wrong inflation rate was applied. This means some Members have received a higher level of cover than should have been provided and were therefore also charged higher premiums.
Why did it happen?
Unfortunately, we loaded the incorrect inflation rate into our IT system. This was a manual error that we made. In addition, in some cases, our system was not set up correctly for the different types of inflation adjustments that our policies offer. This means that we did not apply the correct inflation rate that should have been applied when cover was inflating at renewal.
Where the rate was incorrect for the policy, this affected the inflation adjustment applied to the policy each time the policy’s sum insured was inflated. As the sum insured also drives some of the premium costs, this error also impacted the premiums charged for your policy where inflation adjustment had been applied.
How do I know that this error has been fixed?
We have changed the way that inflation adjustment rates are administered in our system and the annual process for updating these. We have also added controls to prevent this error from occurring again.
How do I know if my policy is inflation adjusted?
Your policy schedule will show if your policy has the inflation adjustment benefit. This will show as “Inflation Adjustment” set to “Yes”, “Standard CPI” or similar. If your policy has inflation adjustment, you can also check the inflation rate applied by comparing this year’s sum insured to the sum insured on last year’s policy. Depending on your policy wording, your sum insured will have changed by a small percentage between policy years, generally between 2% and 5%. This year, policies will have inflated by 6.9% in line with CPI, and wage-inflating policies will have inflated by 5%.
How are you correcting this error on my policy?
If your policy has been impacted by this issue, you may either receive a refund (e.g., you have previously cancelled your policy), or we will contact you to find out how you want us to manage this error on your policy. As we can’t make decisions about your policy without your consent, we need to know whether you consider that your current over-inflated policy provides suitable cover, or whether you would like to reduce it to the level it would have been had the error not occurred.
We are giving you the option to keep your existing cover – as this is non-underwritten cover, our error means that you have additional cover in place should you need it, although it also comes with an additional premium charge. It is your decision how you want to manage this error for each of your impacted policies, and you may wish to speak to one of our Advisers before you make a decision in relation to this remediation.
You can tell us how you would like your policy treated by submitting the Confirm or change level of cover form, which is also available in your remediation communication.
Why do I have to select an option?
As a result of this error, your current policy does not reflect what it would have been had the error not occurred. We cannot vary your policy, including the sum insured, without your approval. We have provided you with two options to resolve the error: you can either keep your sum insured as it is (maintaining the higher cover), or you can change your sum insured to the correct level and accept a refund for the additional premiums paid for the higher cover. We can arrange for an Adviser to talk through the options and help you decide what option is best for you.
You can choose to keep or change your level of cover or to speak to an Adviser by completing the online form, accessed by clicking the buttons in your remediation communication.
Can I get a refund for the additional cover?
If you decide your cover is too high as a result of MAS’ error, you can reduce your cover to the correct amount, and we will refund you the additional premiums paid due to our error.
If you choose this option and then make a claim, it will be paid at your reduced level of cover. Additionally, if you choose this option and later wish to increase your sum insured, you will need to undergo a new underwriting assessment (similar to when you first applied for cover). Please note that you are not guaranteed to secure further cover in these circumstances.
The additional cover we provided through the inflation adjustment increases is non-underwritten. This means it has been added to your policy irrespective of your health at the time. Since we include the cover added under the inflation adjustment increase in any claim we pay, if you choose to keep your sum insured, we will not provide a refund.
What happens if I choose to confirm my level of cover?
If you choose to keep your existing level of cover, we will send you a confirmation email after you submit the online form. You do not need to do anything else.
You will continue to receive renewal notices in advance of any further inflation adjustments applied to your policy. You will also be able to claim against the level of cover that you have confirmed. Any further changes to your level of cover (outside of contractually agreed non-underwritten benefits such as inflation adjustment or special events increase benefit) will be subject to underwriting.
What happens if I choose to change my level of cover?
If you choose to change your level of cover, we will send you a confirmation email after you submit the online form with details of the premium refund that is owed. We will pay that refund within 10 working days of you submitting your response.
We will also send you updated policy documentation which includes your updated premium amounts. Depending on the specifics of your policy, you may also receive an additional refund (for example if you pay annually in advance).
You do not need to do anything else. You will continue to receive renewal notices in advance of any further inflation adjustments applied to your policy. Any future claims you make will be against your updated sum insured value. Further changes to your level of cover (outside of contractually agreed non-underwritten benefits such as inflation adjustment or special events increase benefit) will be subject to underwriting.
Why did I get more than one letter or email?
As life and disability insurance policies are individual legal contracts between us and our Members, we are addressing errors policy by policy. This means that if you hold several policies, which have all been affected by the error, you will receive a letter or email about each policy separately. You may be asked to do different things for different policies, depending on the exact circumstances of each policy.
If you’ve received more than one communication from us for the same policy, this is because we haven’t yet heard back from you about your specific policy. You can provide feedback on your policy by accessing the form linked in your email and entering your Remediation Identifier. Your Identifier will be different for each policy, and we need a response from you for each policy that requires you to select an option.
Why did my friend/colleague get contacted about this remediation and I didn’t?
This issue only affects some life and disability income policies where inflation adjustment has been applied incorrectly. If your policy has been affected, we will contact you. Our communications will be sent over an extended time frame. Any compensation you are owed will reflect the extra amount of time it takes us to contact you.
What happens if I don’t respond to your communications?
If we don’t hear from you, we will send you follow-up communications. If we do not hear from you before your next policy renewal, we will send you a final communication confirming that we will not change your policy.
Can I change my mind?
No. You can only submit your response once. It is important you carefully consider your ongoing cover and the suitability of each option to your personal situation. If you would like to speak with your MAS Adviser before making your decision, please choose the “Speak to an Adviser” option in your email.
If you want to increase or decrease the level of cover on your policy later, you may do this per our normal policy change process. Any request to increase your cover may require underwriting and is not guaranteed. A conversation with one of our Advisers can help you understand the most appropriate cover for your personal circumstances. You’re welcome to have this conversation before deciding what you want to do to address the error on your policy.
I don’t want to use an online form to communicate, how else can I manage the error on my policy?
Communications from MAS about the error in your policy will come from firstname.lastname@example.org. Our communications will never ask you for passwords or credit/debit card details.
If you wish to communicate with us about this remediation without using the online form, please contact us at email@example.com.
I’m entering my information into the online form, but it is telling me it is incorrect.
Our online form is set up to validate each Member using their date of birth, or the primary mobile phone number provided to us.
If you are an organisation or hold a joint membership, we may not have a date of birth as there can be several named authorities on your membership. The primary mobile number may belong to one of these authorities.
If you are unable to validate your membership using the online form, please call us on 0800 800 627 or email firstname.lastname@example.org.
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