When buying insurance in New Zealand — whether life, health, income protection, or business insurance — you’ll face a choice: buy direct from an insurer, or use an insurance broker or financial adviser. Here’s how to think through that decision.
The Two Main Channels
Direct Insurance
You buy directly from the insurer — online, by phone, or through the insurer’s own agents. The insurer both sells and underwrites your policy.
Common direct products in NZ:
- Car insurance (AA Insurance, AMI, Tower, Youi)
- Home insurance (AA Insurance, AMI, Tower, Initio)
- Travel insurance (Southern Cross, Cover-More)
- Some basic personal insurance
Insurance Broker (or Financial Adviser)
A broker or adviser acts as an intermediary — they access multiple insurers on your behalf, provide advice, arrange the policy, and support you at claim time.
Common broker/adviser products in NZ:
- Life insurance (most life insurance in NZ is sold through advisers)
- Income protection
- Trauma and disability insurance
- Health insurance (often adviser-recommended, though some direct products exist)
- Business insurance (commercial lines are almost exclusively broker-placed)
How Brokers Are Paid
Commission-based (most NZ personal insurance): The insurer pays the broker a commission — typically 20–30% of the first-year premium, with renewal commissions ongoing. You don’t pay the broker directly.
Fee-based: Some advisers (particularly fee-based financial advisers) charge you a fee for advice rather than taking commission.
The commission question: Commission creates a potential conflict of interest — a broker paid more by Insurer A than Insurer B has a financial incentive to recommend Insurer A. Good brokers manage this professionally and must comply with their duties under the Financial Markets Conduct Act 2013 (FMCA).
Under the FMCA, financial advisers providing personalised advice must act in your best interest. Asking a broker to disclose commissions and explain their recommendation is entirely appropriate.
When a Broker Adds Value
Life and Personal Insurance (Income Protection, Trauma, Disability)
The NZ life insurance market is complex — dozens of products across 6+ providers with meaningfully different policy definitions, claims histories, and premium structures. A broker who specialises in this area can:
- Compare policies across all providers simultaneously
- Identify which providers offer better terms for your specific health or occupation profile
- Interpret policy wording (e.g., how is “own occupation” defined?)
- Structure the policy correctly (sum insured, waiting period, benefit period)
- Advocate for you if you face a disputed claim
For life, income protection, and trauma insurance, using an experienced broker is strongly recommended.
Commercial / Business Insurance
Commercial insurance is not sold direct to most NZ businesses. Business insurance (public liability, professional indemnity, commercial property, etc.) is accessed through brokers who place risks with commercial underwriters (NZI, Vero, QBE, Allianz, Zurich, etc.).
For business insurance, a broker is not optional — it’s the primary channel.
Health Insurance
Health insurance is available both direct (Southern Cross, nib, AIA direct) and through advisers. An adviser adds value by comparing across all providers and helping you understand how your health history might affect policy terms.
When Direct Is Fine
Car Insurance
Car insurance is well-standardised and widely available direct. Getting quotes from AA Insurance, AMI, Tower, and Youi online is straightforward, and the products are comparable enough that the cheapest quote for equivalent cover is often the right choice.
Home Insurance
Similarly, home insurance is relatively standardised and suits direct comparison shopping. For straightforward properties, going direct and comparing online is efficient.
Travel Insurance
Travel insurance is available direct from Southern Cross, Cover-More, and others — easy to compare online for standard trips. For complex health situations, a specialist travel insurance broker adds value.
Questions to Ask a Broker
If you’re working with a broker or financial adviser for personal insurance:
- Which providers do you have access to? (Some advisers are restricted to a subset)
- What commission do you receive for this recommendation?
- Why do you recommend this provider over the alternatives?
- What would happen if my circumstances change — can I adjust the policy?
- How do you support clients at claim time?
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