Fair insurance

Why we need to fix the insurance market.

Waste paper in bin

Consumers are paying more than ever for insurance. But they’re not getting a fair deal.

Our latest survey research found:

  • Consumer trust in the insurance industry was low. Just 13% of consumers felt confident insurers could be trusted.
  • Only 8% thought insurers always offered fair terms.
  • Just 18% felt they fully understood their insurance policy.
  • As many as one in four have had a problem with their insurer.

Our investigation also found consumers who bought insurance through an adviser or broker were getting a worse deal. They were significantly less likely to be satisfied with the service they got compared with those who bought direct from an insurance company.

Trust in insurers is low

For an industry that markets its products as providing “peace of mind”, trust in insurers is low.

Our research found just 13% of consumers strongly agreed they can trust insurance companies to give them good advice.

Unclear and unfair policies

An insurance policy should clearly set out what your insurer will provide if you need to make a claim.

However, our survey found only 18% of consumers felt confident they fully understood their policy.

For many, complex terms and conditions made weighing up different insurers’ policies hard work. One in four said they found comparing insurance companies and policies difficult.

The result for consumers? It’s that much harder to shop around and make an informed choice about the best policy.


Comparing complex terms and conditions isn’t the only issue consumers face. Twenty-four percent had experienced a problem with their insurer.

The most common complaint was having a claim unreasonably declined. Insurers can decline a claim if they think the customer hasn’t told them something they consider material. It doesn’t matter whether the omission was innocent or deliberate.

While other countries have beefed-up their laws to protect consumers in cases of accidental or innocent non-disclosure, that hasn’t happened here. The result? More claims are likely to be declined because of innocent slip-ups, whether it’s forgetting to disclose an old sports injury to your life insurer or a speeding ticket to your car insurer.

Poor customer service and steep premiums were the next most common causes of complaint.

Pressure to accept a settlement with their insurer was reported by one in 10 of those who experienced a problem.

Six percent had been sold a policy that wasn’t suitable for them while 5% had been stung with incorrect charges.

Advisers failing to deliver

Consumers who buy insurance through an adviser or broker are more likely to feel they’re getting a raw deal.

Our research with Consumer NZ members found those who purchased insurance through a broker were significantly less likely to be satisfied with the service they got, compared with those who bought direct from an insurance company.

This difference was the most pronounced among respondents with life insurance policies.

Just 28% of those who bought life insurance through a broker were happy with the customer support provided, compared with 44% who bought direct from an insurance company.

Similar differences were seen in satisfaction ratings for price and policy information. Only 34% of those who bought life insurance through a broker felt their policy was easy to understand, compared with 49% of respondents who bought direct from an insurance company.

Why the difference? Insurance brokers typically work on commission. In the life insurance industry, these commissions can be as high as 200% of the premium. Bonuses for meeting sales targets and other incentives can also be paid.

Commission-based selling inevitably raises the risk an adviser will put their interests ahead of the consumer’s. Our research suggests commission-based selling is leading to less satisfied customers.

Your views

It seems to have been a great way for advisers to boost their income by getting clients to ‘upgrade’ their policies … my adviser told me [that I’d] be best to move my life cover – he would save me quite a lot on premiums … now my life cover is nearly twice the price!

I have recently discovered that I have been overpaying on my insurance for years and was sold two different kinds of life insurance policies. I’ve been over-insured for at least 15 years.

I stupidly got conned by a broker and changed [insurers] (being told we would save $100 per month!!) WRONG! We saved $20 per month and then, after the first year, our premiums cost us nearly $40 per month extra!!

It's too hard to compare prices with other insurers. I suspect I'm paying too much but don't know how to find out prices for alternatives. None of them publish them on the website. Also too difficult to compare the cover.

It really is quite impossible to compare any insurance product with constantly changing market offerings, ultimately measured only by response to honest claims.

Hate the fine print. Too hard to understand especially when trying to compare one with another.

[My insurer] rolls over our policy every year, premiums are increased and yet we have never been contacted as to whether we have enough cover.

Costs rising

We’re paying more than ever for insurance.

Over the past decade, insurance costs have risen sharply. Statistics NZ data show a 40% hike in the combined household cost of car, contents, home, health and life insurance cover.

What needs to change

The insurance industry needs to work better for consumers. We’re proposing simple changes that will help ensure consumers get a fair deal and advice that isn’t skewed by commissions.

  • Making cover clearer: requiring insurers to provide a simple one-page policy summary would make it easier for consumers to understand and compare what’s on offer.
  • Fixing unfair terms: making insurance subject to the Fair Trading Act’s ban on unfair terms would help get rid of one-sided policies. Insurance is the only industry that’s largely exempt from this ban.
  • Dealing with disclosure: preventing insurers from unreasonably declining claims where a customer accidentally or innocently fails to disclose information would help ensure fair outcomes.
  • Improving price transparency: requiring insurers to provide clear information about costs, including increases at the time of renewal, would make it easier for consumers to shop around.
  • Publishing complaints: requiring industry dispute schemes to “name and shame” companies that aren’t playing fair would help push the industry to lift its game.
  • Cleaning up commissions: getting rid of commissions would be the best way to tackle the conflicts of interest they create.

Member comments

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Barbara E.
26 Jul 2020
Car Insurance

The only trouble I've had with my insurer is when my car was hit from behind when I stopped at a pedestrian crossing. The other driver asked me why I stopped too quickly - he'd been too close behind me for a while. Had suspicions about his character by his aggressiveness, so reported the accident to the police. Then my insurer said I would have to pay the excess! I said it wasn't my fault and had reported it to police. I think they (insurer) already decided he was not going to pay up because he was uninsured, and put the burden on me. I rang the police back and after talking with them - they said that the insurer had to pay - and I should not have to pay the excess. Called insurer back, told them what police said and lo and behold - I was off the hook for excess! Just an example of how they will try to get out of whatever they can.

Melva L.
24 Jun 2019
and the worst insurer of all... EQC!

having paid for full insurance cover on her house, she has a earth slip in the basement. The EQC paid out $27K (take it or leave it) for repairs that will cost $45K. Her insurer will not top up the difference. Neither EQC nor her insurer care that she is being so poorly covered despite her full cover and perfect payment of the premiums. In fact her insurer threatened that if she did not drop her challenge then they would note issues on the cover that would cause trouble for her in the future! Really appalling.

Paul U.
24 Jun 2019
A Matter of Trust

Kiwis should be very careful when purchasing travel insurance, particularly travel insurance through Australian company Flight Centre as agents for CoverMore which is really Zurich Australia Ltd. Zurich is notorious world wid
e for declining to pay, ignoring, stalling and delaying claims through a variety of administrative and bureaucratic ruses. The lack of proper governance and regulation is exemplified by the failure of the Insurance and Financial Services Ombudsman to properly hold the insurer to account by meekly accepting week and pathetic assertions as facts. BEWARE. I spend many thousands annually on insurance. I'll be asking my property and marine brokers just who is the ultimate insurer in future. If it is Zurich Australia I'll change, it's not just a matter of price, it's a matter of trust.

Paul Unger, Napier.

Peter L.
25 Jul 2020
Flight centre should not be selling

I have experienced flight centre staff making mistakes & errors, Then not admitting to or taking on board learning or that the they have made mistakes, their management do not hold them to account. All of this ensures that offen flight centre selling in travel insurance is often no more than $ collection with often no guarantee that the customer has good and proper cover for what they think they have purchased...
Likely for flight centre this is never found out... as most insure is not claimed against...

Katherine H.
14 Sep 2018

I have just had a 43% increase across the whole policy for Landlords insurance. The only disclosure I have been given is that the EQC cover increased by 33%, but across the whole policy that only equates to a 5% increase. I cannot get an explaination for where the other 38% increase has come from. It turns out that this is across the board from all insurance suppliers, I could not get the policy premium down by switching suppliers. This in turn means that we will need to increase weekly rent