By Diana Clement*

Insurance company Youi is under fire for alleged ambush selling and debiting thousands of dollars from “customers” who believe they have only asked for quotes.

The Commerce Commission has confirmed it received complaints about Youi and is investigating. (Also see Youi whistleblowers speak out).

Youi claims to have stopped the controversial practices. Yet Interest.co.nz has found sales agents continued to employ the same hard sell methods even after the Commerce Commission became involved.

Some of the allegations from Kiwi customers include:

• Being ambushed into handing over payment details when they were only looking for a quote;

• Having their bank accounts and credit cards charged for policies they weren’t aware they’d agreed to, or had asked Youi not to activate until they said so;

• Customers being hit with repeated dishonour fees from their banks because of Youi debits they weren’t expecting. Many didn’t appreciate that they’d agreed to sign up to a policy or thought it was cancelled;

• Some of the policies on offer fail to include cover considered standard by most New Zealand insurers such as goods away from home with contents insurance;

• Not being made aware that accidental damage cover and/or mobile phones were not covered by standard Youi policies;

• Sales agents who are remunerated according to how much business they sell or retain allegedly manipulating information in people’s policies in order to make the premium acceptable, but therefore putting customers at risk of having claims declined;

• Emails to cancel policies not being actioned and customers not told that Youi doesn’t accept email cancellations;

• Staff allegedly telling customers that policies have been cancelled but failing to action the cancellation in order to keep their performance-based bonuses (commission). And;

• Staff members upselling policies instead of cancelling.

‘Big dirty little secret’

Three former employees including one former manager have come forward with allegations about Youi and say that the selling practices were employed widely in the company’s New Zealand and Australian call centres during the time they worked there with new staff members learning how to do it from old hands.

“Agents listen to calls of the top performers and follow that,” one ex-employee told us. “It’s Youi’s big dirty little secret.”

The ex-employees say that the payment system employed by Youi is encouraging bad behaviour by staff.

The whistle-blowers have helped join the dots to explain practices outlined by dozens of angry Youi customers tracked down by Interest.co.nz

Hundreds of complaints

Interest.co.nz has been tracking postings about Youi on Facebook, Trade Me Community forums, Productreview.com.au, other review sites, and Youi’s own website. We’ve seen hundreds of complaints about the practices outlined in this article.

Youi’s own website has a section called the “Wall” where customers’ comments are posted usually under their first name only. Unlike the other sources used for this article there is no link to their social media profiles to identify the people and verify their story, however they can only post on the Wall if they are bona fide customers.

Devitt said the satisfaction rating on the “Wall” is 86%.

“In your perusal of the Wall you will undoubtedly have read positive posts from consumers who are delighted with their experience with Youi. We’re extremely proud of this achievement although acutely aware of the complaints. Put simply, they’re visible for all to see and we remain committed to addressing them.”

Devitt added: “It’s important for us to understand it in totality so that we can address it correctly. A fair review of our responses on the Wall will show that we deal with complaints in this way and this has certainly been one of the key aspects that lends credibility to the Wall and which underpins its transparency.”

Getting credit card details for quotes

One of the most common complaints about Youi is that sales agents routinely ask for payment details from clients who are simply seeking a quote. Devitt said the Commerce Commission has received no more complaints since June last year. However complaints continued to arise on Youi’s own feedback “Wall” and until February this year on its Australia/New Zealand Facebook page Facebook.com/youi, after which the page was geoblocked so that New Zealanders could no longer see it.

Customers that we tracked down tell Interest.co.nz they have had accounts debited for quotes after they say they were tricked or worn down into handing over credit card or bank account details for a variety of ruses such as ‘holding the discount’ or ‘verifying your identity’.

The first of Youi’s former staff members to make contact said he would tell customers: “I need your credit card details to secure your discount.” He admitted to Interest.co.nz that an agent can give customers a discount at any point or send out a quote without taking customers’ credit card details.

“You are rewarded for getting people’s credit card (or bank) details and penalised very very smally for a cancellation – even if it is in 30 minutes time,” the second ex-employee told Interest.co.nz.

Another former employee told customers who wanted to see the policy wordings that the only way they could do this was if he sent out policy documents and for that he would need bank account or credit card details. The truth, he said, was that agents could send out quotes and PDF documents of the policy wordings but that “it (was) obviously something that we tried to avoid”. He pointed out that the policy documents were available for anyone to read on Youi’s website, and staff could have told customers this but didn’t. “It is just a strategy,” he said. The customers, he added, would get confused and agree to give their payment details.

This ex-employee’s former colleague added that it was his “mission” to get the payment details even if the customer only wanted a quote.

Once customers had handed over their payment details many were charged even if they make it clear they don’t want the policy.

‘What the hell?’

Tauranga resident Chris Courtenay posted on Facebook that he phoned Youi for a quote in August and told the staff member he wouldn’t take the policy. The staff member didn’t take this as a “no” and set up a direct debit from his account anyway. “What the hell?” he posted.

“Five months down the track my wife (also my accountant) asks me what the strange charges are on one of my accounts,” he told Interest.co.nz. “I had no idea and asked my bank who informed me it was from Youi.” Courtenay said he was refunded only after he threatened to take his case to the Commerce Commission.

Some customers who didn’t hand over their payment details for quotes in the first conversation have reported getting repeated calls – sometimes late into the night – from staff in the New Zealand and Australian call centres attempting to wheedle these details from them.

Manukau resident Brodie Johnstone posted on Facebook: “When I wouldn’t pass over a credit card number or bank account number it all got pretty serious, since then I have had seven calls from some guy in Australia trying to track down my bank number. No way buddy!! Piss off!”

Aucklander Sam Paulsen went online to Youi’s website in July looking for a quote. To his surprise he got a phone call almost immediately from a ‎Youi staff member who asked questions for 30 minutes, resulting in Paulsen getting in trouble with his boss.

“The reason the first call took 30 mins was because the guy wouldn’t take "no" or "I’ll think about it" for an answer, he even wanted to get his manager involved to try and sign me on the spot! This is ridiculous, if you value your customers why do you pressure and bully them into joining? Disgusting way to deal with customers,” Paulsen posted.

He added: “I have since been getting constant phone calls from various different numbers I suspect all belong to Youi. All I wanted was a no obligation quote whereby I can make a firm decision at my own pace. I am getting on average six to seven calls a day. ‘Your bullying tactics to try and get me to join will only do the opposite’,” he wrote.

And Helen Johnson told Interest.co.nz she received 10 calls after she refused to hand over payment details for a quote. She did manage to have a quote sent to her. She said that the agent used the line that the quotes were only valid if she gave payment details that day, said Johnson. When the quotes arrived they were valid for two weeks proving to Johnson that her payment details weren’t needed to generate them.

“Over the next two weeks I had 15+ plus missed calls from them,” she said.

Youi said the ongoing complaints about its practices were the result of customers misrepresenting details of the sales calls. Devitt says that when senior staff listen to the calls the customer has agreed to sign up for a policy.

Insured for a ‘non-existent’ car

Aucklander Gemma Nortje said she had her account debited for a policy on a non-existent car. “They are horrible,” she told Interest.co.nz. Nortje and husband Marius were considering buying a BMW and phoned Youi in September on a fact finding exercise to determine how much it would cost to insure the vehicle.

“We phoned to get a quote and told them that we don’t have it yet and weren’t getting it until November,” said Nortje.

The staff member harangued her husband Marius for 45 minutes, said Nortje, until he handed over his bank account details. He was told this was to “set him up in the system so we have your details when you phone back”, said Nortje. She said her husband agreed to hand over the details simply so that the staff member would leave him in peace – not expecting to be charged for a car he didn’t own.

The couple immediately received an email saying the policy had been set up and that payment would be deducted from their account on September 12. Nortje contacted Youi three times pointing out that they didn’t own the vehicle and requested that they cancel the “policy”. “The agent replied and said he would forward the cancellation to the correct department.” The policy wasn’t cancelled and Youi attempted to take a direct debit from the Nortje’s account on September 12.

When we referred Nortje’s complaint as an example to Youi, Devitt said he listened to the calls and said that the “actual circumstances” of Nortje’s case were different to what she remembered.

“I investigated Gemma’s matter and her Facebook post creates a different impression to the actual circumstances. Her husband completed the quote and advised that he was buying a car and was arranging the finance. He confirmed the delivery date and agreed to start the policy on that date. He further agreed to email the advisor if there was any change in plans. The start date, premium and deduction dates were confirmed and policy documents were emailed to him.”

Devitt said his company had no record of the three emails sent with cancellation instructions. He said the policy was cancelled on September 15 following Nortje’s call. This was not the only example of Youi saying there was no record of cancellation emails.

Wellingtonian Scott Elsdon’s wife Tina says she spent over three hours getting a quote for house and contents insurance.

“At the end they requested our bank details as they were needed before a quote could be generated,” Elsdon told Interest.co.nz. “She gave in, which was our mistake. We didn't want the policy, and signed nothing. A week later on 1st September we had money taken from our bank account.”

‘An unstoppable monologue’

A Dunedin air traffic controller who did not want to be named told Interest.co.nz that he was talked into accepting the policy but decided not to go ahead after reading the documentation.

“That's when the fun began,” he said. “I rang Youi, expecting a five minute phone call to cancel the policy. The representative immediately launched into an unstoppable monologue about their single excess policy, their roadside assistance program etc. etc. It was literally impossible to get her to stop. I had to hang up,” he said.

“I tried again later and got another rep who was a bit more understanding, but nevertheless insisted on taking me through the same material and then forwarding me a revised policy offer with a promise he'd call me the next day to talk it over. I finally got them to cancel my policy (the following day). It took a further phone call, which I prefaced with the information that we'd made up our minds and would definitely be cancelling, and I asked the rep to please not try to convince me otherwise. He still tried. But eventually after about 20 minutes he gave up and cancelled the policies.”

‘20 phone calls to get his money back’

Likewise Aucklander “Sharma N” posted on July 12 that after 40 minutes on the phone with Youi he was quoted a very high price, but was offered discounts on the condition that he provided his bank account details.

“I told them not to start any of the policies unless I call back to go ahead. After (a) couple of weeks I saw three different withdrawals from my saving account around $950….for my home insurance and the rest for contents and car. No approval. No policy documents. Not even a single letter from them and they took this amount from me. Unbelievably shocking.”

Sharma added: “Literally they made me beg them for my own money; calling them thrice a day/repeating the whole story to a new sales rep every time/putting me on hold for hours.”

Sharma had to send proof that he had policies elsewhere before he was refunded. He posted online that it took one month and 20 phone calls to get his money back.

Alan Thomson, whose complaint happened before the Commerce Commission investigation started, but is very similar to subsequent complaints by others, was completely thrown when $1831.61 was debited from his account for insurance he was sure he didn’t sign up for. At one point in the recorded sales call, which Interest.co.nz has listened to, the sales adviser tells the then 84-year-old “what we can do is set the policy up for you” as if she was doing him a favour. She also said that she could send him out the prices, but if she set the policy up he could look at all the paperwork. Interest.co.nz has been told many times by former staff that they can send quotes and policy wordings out, but just try to avoid it in order to get their bonuses for a sale. At the very end of the call after he had handed over his credit card number and listened to her standard spiel (which said he was getting a policy) he clearly hadn't understood and said: “Ok. Are you going to send me that quote online?” She replied “I can send that one to you.” When he received the documentation he believed it was a quote. But she had set the policy up and his account was debited.

When Thompson phoned Youi to complain that he had been charged for what he believed was a quote, he was grilled as to why he didn't want the policy. “They put me on hold more than once, came back with another offer $200.00 cheaper and reluctantly, after 45 minutes and much pressure now on my part not to proceed, agreed on giving me the refund.”

Thomson, like a number of customers we’ve heard about, was charged a cancellation fee for policies he didn’t believe he had agreed to. When Thomson received his refund it was $88.21 short, which Youi claimed was for eight days of cover – even though he had proof that he was covered by Tower during that time.

‘Customers have misrepresented what happened in the sales call’

When Youi investigates the “allegations”, said Devitt, the company finds that, customers have misrepresented what happened in the sales call. He later clarified his comments and said: “Rather than a suggestion that people intentionally misrepresent the nature of the complaint, they present their perception of it and, as such, there may be another side to it.”

Devitt said that when he listens to the recorded sales calls highlighted by Interest.co.nz he hears that the customers have agreed to start a policy. But many of those who have spoken to us did not realise they had done so, thinking they had handed over payment information to get a quote. Complaints continued to appear on Youi’s Facebook page until it went offline in February 2016.

‘Customer perception may not be the same as reality’

Devitt said his company investigates all such allegations, but added that “customer perception” may not be the same as “reality”.

He suggested that the complaints that were appearing on Youi’s Facebook page and Wall several times a week in late 2015 related to one newspaper article from earlier that year. “The absence of any reference to (the article in question) does not preclude the possibility that they have read it,” said Devitt.

Devitt said on March 8 this year that Youi had “taken customer feedback on board” and “made changes to specific processes and systems to ensure clarity, compliance and alignment with customer expectations.”

However complaints continued on its website from customers.

Hard sell

Many customers report being subjected to an extreme hard sell. Businessman Dale Hurman, posted on Facebook about his disappointment with sales tactics when he tried to get a quote.

Hurman thought he would get an online quote and didn’t think twice that Youi’s website needed his phone number. The next thing Hurman got a call at home.

“My baby was sick and it was past his bed time,” he said.

“Rather than asking if she could call me back at a better time, the sales rep kept me on the phone for half an hour. I repeatedly asked how much longer it would take and asked if we could do it another time.

“This girl simply did not listen to a word I said but was persistent in keeping me on the phone and trying to force me into accepting her quote.”

The air traffic controller quoted above said that despite being a well-educated, intelligent person he found the sales tactics “almost intimidating”. He added: “I imagine many people would wilt under the pressure and end up with something they didn't really want”.

Customers contacted for this investigation say the sales agents often concentrated on one small aspect of the policies. One former employee said this was in order to take potential customers’ focus away from shortcomings of the policies.

Interest.co.nz asked academic Elena Maydell of Massey University for her opinion on Youi’s sales methods as outlined by our case studies. Maydell said they went beyond manipulating or persuading clients, and were virtually bullying them into buying polices.

Maydell added that Youi’s agents appeared to use “interpersonal psychological techniques to divert attention, confuse and wear out the clients who call for quotes and end up with bought policies.”

Impossible to cancel

One of the former Youi employees spoken to by Interest.co.nz said that staff in the “retentions” department, to which cancellation calls are directed, are paid a bonus on the number of customers they retain. Another added that he and his colleagues told customers that they could cancel, but knew they would be directed to the retentions "merry-go-round" if they tried.

Staff members in the retentions department are paid on the number of policies they save from cancellation. As a result they claim that staff members would often put the customer on hold and leave them there in the hope that they’ll hang up. When customers do get through on the phone they have to run the gauntlet of the entire sales process again no matter how many times they say they just want to cancel.

“Jessie” who posted on Youi’s website said succinctly what Interest.co.nz has heard over and over again from customers.

“I just want to cancel my policy, not be sold a new one.”

If the upsell fails it’s not uncommon, one of the former employees told us, for the retention staff to tell the customer that the policy has been cancelled, but take no action whatsoever. Or customers who email cancellations are sometimes told that the cancellation will be actioned. “But it never is.”

That way the agent can record the call as retention and receive their payment. When the customer calls back again it’s likely that they will be dealt with by another retention agent and it will affect the second or third agent’s cancellation ratio and pay not their’s, the ex-employee said.

“They will put you on hold and say they are checking with their manager.”

The customer eventually hangs up and the retention staff member is not “pinged” for losing the customer because nothing was entered into the computer.

“Sometimes they just blatantly hang up,” he told Interest.co.nz.

Many customers say that they don’t have time to wait on hold for 45 minutes or more and then go through a lengthy sales process. They simply want to cancel electronically.

‘At the end of the day if the client wants to cancel they can cancel’

Devitt said Youi has a “rigorous” cancellation system, but does cancel if that’s what clients’ request.

“Yes we have a retention team who would try and do their very best to persuade the customer to keep the policy, look at all the options available……but if at the end of the day if the client wants to cancel they can cancel and the transaction will be put through and the policy would be cancelled.”

Youi won’t cancel policies by email, however customers are often not made aware of this. One customer was even told that Youi used a voice recognition system. However the former staff members say the strategy of not taking email cancellations is to force the customer onto the phone in order to hard sell them and stop them cancelling.

Devitt confirmed that customers can’t cancel by email, but added that all emails would be followed up on.

“I would be surprised that there is no response to that email because we would phone each and every customer. Something could slip through the cracks, but I am very familiar with that process and it would be if you email me I would then make every effort to contact you and we have a very robust process to make sure that happens, and a series of either phone calls or email messages in response to that to say 'we need to get in touch to discuss the cancellation request'.”

Customers, however, report their experience on the ground to be different than that cited by Youi’s marketing department. Former Aucklander Dan Rowe, who had moved overseas, assumed wrongly that his policy would be cancelled automatically.

“I sent an (email) message explaining my circumstances and that I don’t want this policy renewed”, Rowe said. “I got no response.”

Rowe logged onto Youi’s “manage your policy” section of the website to find that he had to call Youi to cancel. After 38 minutes on hold clocking up international call charges Rowe hung up. “I have moved overseas and I don’t have the funds to sit on hold forever and wait for (Youi) to answer the phone,” he said.

Likewise Jasmine Taiamoni of Avondale who posted on Facebook failed to get any response to an email cancellation she made on July 9. To her horror payment went out of her account eight days later. Taiamoni wrote on Facebook “E-mailed your office again on the 20/07/2015 - no contact just an automated service saying that it's been fwd to the correct department. Another e-mail sent on the 22/07/2015 no reply and then you attempted to charge my account on the 24/07/2015. I e-mailed you again on the 24/07/2015 still no answer.”

Taiamoni only had luck when she posted on Youi’s public Facebook page, which resulted in a response.

Devitt said it was possible that some cases of email cancellations not being acted upon “slip through the cracks”. He added, however: “We have a process to follow up with those customers to make every effort to contact them over a series of phone calls and would finally send an email saying we have not been able to cancel the policy because we have not had any contact with the customer.”

Asked if he had seen examples of customers complaining that they had been unable to cancel, Devitt said: “No. Well yes I have heard examples where people have made allegations but when you go and investigate and deal with it appropriately.” Whether it was “persuasive retention” or “hard sell” was down to perception Devitt said.

Dishonour fees

Customers whose accounts were debited unbeknownst to them say that they have been charged dishonour fees by their banks. At times Youi has tried over and over again to take money from accounts resulting in multiple dishonour fees, which in some cases has run into hundreds of dollars.

West Aucklander Stephanie Beckett told Interest.co.nz that she had to switch banks from the ASB to Kiwibank to stop Youi repeatedly trying to take money from her account.

She adds that the Youi staff member she spoke with simply would not listen to her requests to cancel. Even after the cancellation call Beckett continued to receive emails and text messaging saying her premiums remained unpaid. Beckett said she spent 43 minutes on hold on July 18 last year in another attempt to cancel.

“They (the retentions department) physically won’t let you cancel. That is what it felt like.”

Beckett suffers from anxiety and said she couldn’t cope with the confrontation.

By the time she closed her ASB accounts she had been charged $200 in dishonour fees for a policy she said she never wanted. As a result Beckett didn’t have the money to make finance payments on her cars and feared they would be repossessed.

Like many Kiwis charged by Youi for policies they were unaware they had bought, North Canterbury resident Lynda Whitlow was hit with $50 bank fees from Kiwibank for payments Youi tried to take, she believes without permission. Thanks to health problems resulting from mould growing in her quake-damaged home Whitlow can only work 20 hours a week and was on a strict budget to ensure all her essential bills get paid. Youi’s unexpected debits meant her Genesis Energy payment failed.

As a result she was threatened with disconnection by her electricity supplier. After she complained on Youi’s website the insurer refunded her bank fees, but not before she had the humiliation of having to apply to Work & Income for a loan.

Taupo resident Zac Naylor had to cancel his credit card to stop Youi debiting money.

“I rang you people for a QUOTE,” Naylor posted. “After realising I had made a mistake by allowing you to convince me to give you my credit card ‘to complete the quote’. I then noticed charges on my credit card and rang you to complain and you did nothing."

“Now after my card has been changed …. I still got emails and texts saying I haven't paid my bills. I then rang AGAIN and complained and was told ‘a manager will ring me within 24 hours’. That was three weeks ago. Then last week I get a call from some lady in Australia saying she got a message to call me about my unpaid bill.”

Unbelievably Naylor received another call from a member of staff with an Australian accent who tried to convince him to take out third party insurance on one of his cars. Naylor said he was at his “wit’s end”.

Data manipulation

One of the most shocking allegations from the whistle blowers is that Youi’s sales agents and retention staff manipulate the data they enter in the company’s computer systems in order to lower premiums to a level where potential customers might be interested in buying the policies.

On the surface reduced premiums might sound good. The risk, however is that come claim time Youi can decline or void the policy from inception because the policy was based on untrue information. Devitt said Youi will honour claims if this is proven.

However those who don’t have the knowledge of their rights regarding recorded telephone conversations or insurance law or don’t have the wherewithal to fight, may give up and be left out of pocket with no cover.

All three former staff members spoken to by Interest.co.nz claim data was manipulated on a regular basis during their time at the company.

“If the customer doesn’t fit (the Youi computer system) will give you a really bad price,” one said.

The agents said they changed information to ensure that the quote was one the customer might be willing to take, so they received their bonuses for the sales.

“The agents who are making money manipulate a good 60 per cent of them (quotes),” one claimed.

‘No-one cares about the customer because of the payment system’

The ex-Youi employee added that staff were encouraged to be “very selfish” and think of their “commission” above all else. “No one cares about the customer because of the payment system,” he said.

If customers complain that the premiums aren’t cheap during the sales calls, staff members put them on hold to “talk to their manager”, but in reality started manipulating the data to change the premium, he claimed.

“The sales agents quickly realise (learn) to manipulate points that will affect the price. They want to make the sale," he added.

Staff regularly led customers into answers they want, he claimed. Some changed details knowing that it would look like an accident if they were caught.

The second former employee we spoke with said he went through the entire quote process in his spare time playing with different options to see how to best manipulate the system in order to secure his payment.

One of the most worrying allegations is that staff members manipulated the sum insured figures for houses. The Youi policy only pays out up to the sum insured, not the cost to rebuild the home.

‘We made them guess it and low balled them’

The ex-employee said many customers had no idea what it would cost to rebuild their homes. When that happened he would lead them to come up with a low number in order to keep the premium down and clinch the sale.

If, for example, the property was worth $1 million he would say that the majority of this was the land value and suggest figures as low as $150,000 for the rebuild cost.

“If the customer didn’t know how much they wanted to insure the house for we made them guess it and low balled them.”

During their time at the company the ex-staff members say they sometimes typed in a different figure to the one the customer said. “I have seen it,” one claimed. “A person said $300,000 (sum insured) but the staff member puts down $200,000. If the customer noticed the staff member would say it was ‘just a mistake’.”

Other manipulation was common with house policies, they maintain. For example, the first agent to make contact said that if a house was built of wood, the sales agents would check the box for brick construction in the system instead to lower the premium – knowing that the Youi premium on a wooden house will not be competitive with other insurance companies.

He said that the agent might enter the house size as 150 square metres, not 200 square metres to make the premium cheaper.

The second ex-employee said it was common practice to change the date houses were built in order to reduce the premium.

“If you put that your house was built in 1920, the agent might change it to 2015. That would make it a lot cheaper.”

That’s because the system then spits out a cheaper premium and the staff members gets paid a “commission” for it, he said.

The ex-Youi workers claimed that the retention department was the worst offender at data manipulation. If customers want to cancel they are taken through the sales process again and retention agents would tell customers that they were entitled to further discounts. The premiums were reduced, however, not with discounts, but by changing details of the policy.

“(In retention) we saw a lot of what was happening in sales and did a share of it ourselves,” one said.

Potential examples of this alleged practice have come to light. Nortje, for example, said that when the policy arrived, the premium it turned out was based on a 2006 BMW, which would have been much cheaper to insure than the 2010 she was considering buying. She doesn’t believe this was a mistake.

Likewise Sidney Gould noted that his car is a 2008 model, but when the policy arrived it was listed as 2007.

“I believe this is how they were able to beat State by $30,” he said. “When I queried it they were adamant that is what I told them, I informed them that was incorrect and regardless when they entered the car’s details into the computer LTSA would have stated it was 2008 as well. They told me their guy in Aussie wouldn't have had access to our LTSA. So basically they fudged it. I told them to take a long walk off a short pier and went back to State.”

‘A simple mistake’

Much of the information discussed in sales calls on which the policies are based isn’t included in the paperwork sent to clients, which means they would not find out until claim time. The former employees say when a customer such as Gould notices the data manipulation they are told it is a simple mistake, which it will be at least some of the time.

Onehunga resident Amanda Easterbrook posted a 1273 word grievance on Youi’s website on October 2. Among her many complaints was that she discovered the premium she had been quoted was based on her vehicle being garaged.

“I do not have a garage so there is no possibility I would have stated I do,” she wrote.

She doesn’t believe that it was an accident that the details regarding garaging were changed.

Easterbrook said that her call was routed to a member of staff in the Australian call centre. “He was looking at the property on Google Earth while talking to me. He could see there wasn’t a garage.”

When Easterbrook pointed out to a subsequent employee that the garaging was incorrect she said she was told not to worry. “I replied: ‘actually you do. I have now told you it is not in a garage and if you continue to maintain a policy that states it is my policy is going to be void’.”

When Easterbrook was quoted for a new policy the premium was nearly double, which Easterbrook now believes may be due to the original premium being reduced because of data manipulation by the first agent.

When customers do ask for the data to be corrected they often find that the premium jumps as Easterbrook did, despite Youi’s claims to the contrary.

Manipulation wasn’t always limited to a single aspect of the policy, one former staff member said. “It could be every single thing they own has been modified.”

Changing drivers on policies to reduce the premium is a common practice in both the sales and retention departments, one former Youi employee told Interest.co.nz. He added that changing a vehicle from business use to private use was also common.

One Australian customer who posted on Productreview.com.au where many Kiwis also complain about Youi, went through the same call centres that handle New Zealand sales. This customer discovered that the agent had listed his father as the main driver and his own name had been removed from the policy completely which meant he faced a $1375 excess as an unnamed driver.

‘Data manipulation completely unacceptable, dealt with decisively’

Another method of surreptitiously reducing premiums in order to get bonuses was to quietly increase the excess after going “on and on about the excess being ‘this’ price”, which reduced the premium, the second former employee told Interest.co.nz. At the end of the call after taking credit card details the agent would recap quickly, glossing over the new excess in the hope that the customer didn’t notice. Even if the customer did complain, the policy would be in place already meaning he or she had to run the gauntlet of the retention department in order to cancel.

Whangarei customer Tricia McRae believes this may have happened to her. “I think (the Australian-based sales agent) manipulated the premium by increasing the excess without telling me in order to reduce the premium cost! "

Devitt said data manipulation is completely unacceptable and, when identified, is dealt with decisively.

"Any former staff members who have provided you with information may therefore be disgruntled and could very well have been subject to disciplinary action," said Devitt.

He denies that Youi’s sales advisors are paid on a commission basis reiterating that it is performance based pay. Staff call it “commission”.

Policy cover

The issues for customers are not just limited to the way the policies are sold. The house and contents policies in particular do not offer basic cover that Kiwis have expected as the norm for decades.

Whilst Youi’s adverts suggest customers are being sold “tailor made” cheaper cover, the reality is that customers don’t realise they are buying lesser cover rather than necessarily cheaper policies.

Kiwis presume their buildings policies cover "all risks" up to a certain sum insured. Yet the Youi home policies have the lesser cover of “defined risks” meaning customers are only insured for events such as fire and earthquake, but not if they spill a can of paint on their carpet and walk it through the house, as happened to a Kiwi insured with another company recently.

Likewise Youi’s house contents policy doesn’t automatically cover accidental damage or goods taken out of the house. Even if customers pay for the away from home extension it covers just $5,000 and doesn’t cover mobile phones, which need to be covered separately.

Most insurance companies have two policies, comprehensive and budget – which are sold under various names. Youi’s contents policy in particular corresponds with the budget policies sold by other insurers, not comprehensive insurance that customers think they are getting.

Interest.co.nz asked IAG which owns State, AMI, NZI, and Lumley, which it sold as standard. The reply was that the majority of the time customers were sold comprehensive policies. These cover accidental damage and goods away from home as standard.

To double check this, Interest.co.nz phoned State Insurance’s call centre posing as a customer and was given the same answers. It was made clear in that call a budget policy, which corresponds with Youi’s policy didn’t cover these basics was not ideal.

‘I’d love to get my teeth into this’

When we showed Youi’s policies to leading insurance lawyer Andrew Hooker, managing director of Shine Lawyers NZ Limited, he said he was shocked and added: “I’d love to get my teeth into this.”

“(Youi’s) house and contents policy is a terrible archaic policy providing defined events cover only and even the optional accidental damage cover is only $5K.”

Hooker said the “defined risk” policies with no accidental damage and away from home cover as standard offered by Youi were the industry standard 35 years ago.

“Most insurers have a policy like this that they sell to people who want a very cheap option or have some reason why they only want or can get limited cover.”

We asked the Insurance Council when “all risks” policies covering accidental damage became the norm. The Insurance Council said it was sometime before 1981. Standard contents insurance cover was extended around the same time to cover anywhere in New Zealand.

Hooker questions whether Youi’s TV advertisements are misleading.

“I reckon you need to make notes of those TV ads where they say ‘Sally saved $XYZ’ and ask them what sort of policy Sally had. If it is one of these policies then (unless Sally had a defined events policy before, which I can almost guarantee she wouldn’t have had, they are not providing apples for apples and this is seriously misleading advertising. Regardless, to offer customers this type of policy without explaining very carefully that it is a very limited cover is seriously dodgy.”

The issue of not comparing apples with apples leads to questions of whether Youi could be at risk of breaching the Fair Trading Act by omission. None of the customers spoken to by Interest.co.nz said their sales agent had drawn their attention to the fact that they were being offered a more basic policy than is the norm in New Zealand. Most assumed that they were being offered a similar style policy to the one they had with previous insurers such as AMI, State, Tower, the AA and others.

Failing to sell extras

One of the other potential issues with the sales process that Interest.co.nz has become aware of is some agents failing to make customers aware of added extras such as mobile phone cover or a hire car extension that may in fact be in their interest to buy.

The first former member of staff to contact Interest.co.nz said this was because it pushed the premium up meaning customers didn’t buy the policy. If the agent wanted his or her commission, it was best not to mention extras.

Those extras include “accidental damage” on both house insurance and contents and cover away from home on the latter – all of which come as part of the standard cover from all leading insurers in New Zealand as well as many smaller players such as MAS and FMG.

When asked about customers not being informed that they weren’t covered for accidental damage as they would be under standard New Zealand policies Devitt told Interest.co.nz that up until the end of 2015 Youi “ordinarily wouldn't inform the customer in that call that accidental damage isn't included”. He later added by email that Youi had redesigned the quote process to offer “optional covers” such as accidental damage prior to the conclusion of the quote. It will not be included as standard.

Another “extra” that Kiwis expect as standard that is not included in their Youi policies is a second driver on their motor vehicle policies.

Bay of Plenty resident Olivia Otley remembers asking her sales agent if there were any extras she could add to her policy for the family truck. She was particularly concerned about courtesy cars as she and her husband worked an hour away from each other.

“He said: ‘no’. He didn’t offer it to me.”

When her husband was involved in a head on crash and the car off the road for more than nine weeks before Youi decided to write it off she found that there was an extra she could have paid for, but wasn’t offered.

“When the accident happened they said: ‘you haven’t paid the extra premium for a courtesy car’,” she told Interest.co.nz.

Kapiti resident Brooke Coolen did manage to get “away from home cover” when she took out her Youi contents policy. Coolen posted that she was told by the agent that her phone was covered. But when she subsequently claimed, she heard the opposite. She asked for the records of her phone conversations, which she's entitled to under the Privacy Act. Five days later she had heard nothing from Youi. Other customers have told Interest.co.nz that they have struggled to get Youi to release the recordings of conversations where they allegedly agreed to set up policies and direct debits.

Many similar complaints appeared on Youi’s website, Facebook page (until it went offline in late February) and elsewhere from customers who failed to realise until it was too late that they didn’t have away from home cover, or if they did, their mobile phones still weren’t covered unless they paid an additional premium.

‘We would settle the claim as per whatever the correct sum insured would be’

The biggest risk to customers who think their data has been manipulated is that their claims will be declined for non-disclosure by claims staff. Some customers will assume that they gave the staff the wrong information or may not be aware of complaint routes.

Asked about the practice of data manipulation, Devitt told Interest.co.nz if data manipulation was happening, it would be “dishonest” and Youi would both honour the premiums offered even once the data had been corrected and honour claims.

If it can be proved that the data entered into Youi’s system was lower to that advised by the home owner the company is required by law to pay the higher sum. If, however the home owner was led into stating a low sum insured and they didn’t go back to have it corrected, they will only be entitled to the sum insured, unless they can prove data manipulation.

Devitt said if a customer had been led into stating a lower sum insured than it would cost to rebuild the house: “We would settle the claim as per whatever the correct sum insured would be where a person has been led.”

The worry, however, is that a customer may not realise that they have a case to complain to Youi or the Insurance & Savings Ombudsman and accept hundreds of thousands of dollars less than it would cost to rebuild their homes.

Potentially misleading advertising

Youi advertises that it asks more questions. However former staff and industry insiders say that this is done to a: cherry pick only the very best risks, shunning people that other insurance companies would insure, and b: to ensure come claim time that there are more chances of rejecting a claim due to non-disclosure.

As Trade Me user searsclan posted: "As soon as I saw Youi's ads about 'asking questions' I thought - this company is looking to gain sufficient information that they'll be able to find loopholes in the event of a claim.”

Cammey on Trade Me added: “It’s the most common way for an insurer to reject a claim, and the more questions asked, the more chance that you will either answer one incorrectly, or will fail to disclose changes.”

What’s more all those questions give the insurance company an out if your circumstances change.

If for example a customer tells Youi that their car is garaged, but later turns the garage into a rumpus room and parks the car in a carport instead, the cover will have been invalidated. Not everyone would think to inform their insurer of this change. Yet the contract was based on the fact that the car was not kept garaged. In effect the more detail disclosed the greater risk that the claim will be declined.

When it comes to cherry picking customers many have found that they’re automatically excluded because they live in earthquake or flood prone areas.

Customers such as “Clare” who posted on Youi’s website in September find that if they live in an earthquake zone Youi won’t touch their insurance.

“It’s a bit misleading for Youi ads to offer home insurance for New Zealand when your company doesn't cover all areas. I was told I couldn't get a quote for home and contents as I live in an ‘earthquake area’. That more or less rules out all of NZ.”

Likewise “Damian” posted on Youi’s own website complaining that Youi wouldn’t cover his home because of “flood risk”. “I have never heard something so stupid, Most of the country is surround(ed) by water,” said Damian. Only bona fide customers can post on that website.

Premiums not cheap

One of Youi’s main selling points in its TV adverts is that it’s cheaper than its competitors. Many potential customers say the premiums aren’t cheap despite what the advertisements say. Some have found the premiums to be double what they’re paying at their existing insurers.

Port Motueka resident Dan Oakeley posted on Youi’s Facebook page: “I nearly lost the will to live too, but hung on in there .they finally quoted me $500ish nearly twice what I pay with AMI. Youi(d) best leave them alone..BASTARDS,,,!”

Sebastien Krebs of Christchurch added: “Give AA a try. Got it with them for half.”

And when Ruth Urban called Youi to get a quote for her parents’ household contents was charged $200 more than AA was quoting for a more comprehensive policy.

Kim Rofe posted on Facebook: “Went to State and got insurance for a third of the price that you guys quoted. Shot for trynna rip off a uni student guys”.

Aucklander Suhayl Khan said: “Yup I did call a few weeks ago. Wasn't too impressed with the CSR who kept dragging the phone call and in the end gave a premium more than twice the price of another insurance company. And had nothing more than sorry to say. Not really cheap!”

And Sue Simpson of Balclutha posted: “Yet again I've seen your advert about how you helped ‘Sue’. Not this Sue! Your price was the same as the insurance company we have been with for 40 years. So (name withheld) started telling me lies to persuade me to change. I would have thought that my email explaining why I didn't change might have brought a reaction but you don't seem to care.”

There were similar stories from Amanda Rogers of Tauranga, Sue Beardslee of Wairarapa and Stuart Knight of Canterbury.

Many Kiwi customers have not yet had a year’s insurance. However over the ditch stories have emerged of premiums being hiked dramatically after a year. The former staff said premiums were hiked in particular for customers who had missed payments during the year. Discounts given during the sales and retention process don’t always roll over to subsequent years.

Complaints galore

As well as thumbing its nose at the Commerce Commission Youi would appear to be ignoring the Insurance and Financial Services Ombudsman.

Many customers have posted online or told Interest.co.nz that they either have or will be contacting the Insurance and Financial Services Ombudsman. The Ombudsman’s office would neither confirm nor deny whether there were active complaints against Youi.

Youi customer Charlotte Wade complained to the Ombudsman over her treatment. The law graduate received a call the next morning from the Ombudsman’s office. “The Ombudsman said to me: ‘we’ve heard this before but we have no case’. They said (to me) they have no way to enforce anything against Youi. All they can do is make recommendations to Youi, which they have done quite a few times but Youi has chosen not to take them up.”

Interest.co.nz has spoken with Consumer Protection experts at Ministry of Business, Innovation and Employment (MBIE) who say that Youi’s practices may raise questions under the Fair Trading Act, the Consumer Guarantees Act and the Fair Insurance Code.

The experts say that calling customers who believe they are getting a quote online may fall under the Fair Trading Act provisions dealing with uninvited direct sales agreements.

“By leaving their contact details, (including telephone number) for the purposes of a quote, a consumer is not inviting an insurer to ring them to enter into an insurance policy,” we were told. “They were inviting the insurer to contact them in respect of a quote. Therefore if an insurer called a consumer back in respect of a quote but during that conversation also enquired about the consumer signing up to a policy, then the resulting insurance contract may fall under the uninvited direct sales provisions of the (Act).”

The Act also includes provisions that prohibit businesses from engaging in misleading and deceptive conduct as well as from making false or misleading representations.

As well as the Fair Trading Act Youi’s practices could be questioned under the Consumer Guarantees Act, which applies to all services that are supplied to consumers in NZ.

The Consumer Protection representative said the cases cited by Interest.co.nz could raise issues as to whether the insurer used reasonable care and skill in supplying a service as a result of:

• asking for credit card or bank account details when a consumer is only seeking a quote;

• not explaining why payment details are required/misleading a consumer as to the reason;

• acknowledging (by email) that an insurance policy has been cancelled but later requiring a consumer to provide further cancellation notification;

• not advising a consumer that further cancellations would be required and in a different mode from the original form such as text instead of email. And;

• loading a consumer up to an insurance policy even when the consumer has cancelled - requiring the consumer to opt out.

Youi’s practices may not meet the Fair Insurance Code if the explanations to customers about needing credit card details are not accurate. The Code requires insurance companies to provide accurate answers to questions from consumers.

The Financial Markets Authority has received complaints directly and seen the complaints made to the Commerce Commission. It can take a prosecution under the Financial Markets Conduct Act if it suspects that there is misleading or deceptive conduct in relation to financial products or services.

"The alleged offending first came to light when I was researching another article about insurance. I called Youi to get a premium quote solely for that article. Realising that the staff member was on commission I informed him three minutes into the call that I was a journalist and the quote was needed for an article. Even after being made aware of this, the staff member claimed, as turned out to be common, that the Youi IT system could only generate a quote if payment details were entered, but nothing would be taken from my account. He knew the quote was for an article and never in my wildest dreams did I think I would be charged. To be careful I sent emails to the staff member to ensure the policy was cancelled. But the money was debited from my account none-the-less. I was so horrified that this could happen that I contacted the Commerce Commission, which subsequently launched an investigation/ "At the time Youi’s chief executive Danie Matthee told me that one rogue employee had been responsible and that he no longer worked for Youi. I soon became aware that my experiences weren’t a one-off and I tracked customer complaints from the middle of 2015. New complaints about Youi's sales methods and unexpected direct debits from accounts have appeared as often as several times a week on social media. "Even after the Commerce Commission investigation was launched customers continued to report the practices happening repeatedly. In February 2016, for example, 11 months after my investigation began, Simon Lundon complained to Youi that premiums were deducted from his bank account despite him believing he was only asking for a quote." Youi is a South African insurer that entered the New Zealand market in 2014, and is fully licensed as an insurer by the Reserve Bank. *Diana Clement can be reached by email at diana@wordfusion.com

Although the Commerce Commission investigation is still in progress, consumer experts say Youi’s practices could be breaching a number of provisions of the Fair Trading Act and the Consumer Guarantees Act as well as breaking the company’s obligations under the Fair Insurance Code.

When contacted for this investigation Youi’s marketing manager Trevor Devitt agreed the company continues to receive complaints, but said the customers we contacted mis-represented what happened in their calls. Devitt said Youi had been "fully co-operative and transparent" in its dealings with the Commerce Commission, whose investigation, he said, was finished.

"We’re awaiting their final response to the investigation," Devitt said.

Consumers who believe Youi may have broken the law in dealing with them can contact the Commerce Commission, the Financial Markets Authority, the Insurance Council, and/or the Insurance and Financial Services Ombudsman.

August 28, 2016: This same issue has broken in Australia now too.