Myth: I have to pay for insurance advice in New Zealand
One of the most common reasons New Zealanders avoid using an insurance broker is the belief that they have to pay extra for insurance advice. In reality, this is one of the biggest myths in the insurance industry – and it often leads people to miss out on valuable support.
Let’s break down how insurance advice actually works in New Zealand.
Where the myth comes from
Many people assume that because insurance brokers are advisers, their services must come with an additional fee. This belief is reinforced by experiences in other industries, such as legal or accounting services, where advice is typically billed directly.
However, insurance operates differently.
How insurance advice is usually paid for in NZ
In most cases, insurance brokers are paid by the insurer, not the client. The insurer pays the broker a commission for arranging and servicing the policy. This commission is generally already built into the premium, whether you buy the policy directly or through a broker.
This means:
- You usually pay the same premium whether you go direct or use a broker
- You don’t typically receive an invoice for advice
- You still get access to professional guidance and claims support
The Financial Markets Authority (FMA) requires advisers to disclose how they are paid, so clients can clearly understand any commissions, fees, or potential conflicts of interest before proceeding.
Does “free advice” mean lower quality?
Not at all. Insurance brokers in New Zealand must meet strict regulatory requirements under the Financial Markets Conduct Act 2013. This includes:
- Holding the appropriate financial advice licence
- Acting in the client’s interests
- Making clear disclosures
- Maintaining ongoing professional standards
- Brokers are also subject to conduct duties designed to ensure advice is fair, suitable, and based on the client’s circumstances — not simply on price.
What you get when you use a broker
When you work with an insurance broker, you’re not just buying a policy. You’re gaining:
- Access to multiple insurers, not just one
- Help understanding policy wording and exclusions
- Assistance with updates and reviews as life changes
- Support at claim time, when guidance matters most
According to the Insurance Council of New Zealand (ICNZ), many claim issues arise from misunderstandings around policy terms or inadequate cover — areas where broker advice can significantly reduce risk.
When might a fee apply?
In some situations — such as complex commercial insurance or specialist advice — a broker may charge a fee. If this applies, it must be clearly disclosed upfront, allowing clients to make an informed decision.
There should be no surprises.
The real cost of avoiding advice
The bigger risk for many New Zealanders isn’t paying for advice — it’s not getting advice at all. Under-insurance, incorrect disclosures, and unsuitable cover often cost far more than any advisory fee ever would.
Insurance advice in New Zealand is often accessible without direct cost, but the value it provides can be significant — especially when it comes to choosing the right cover and navigating claims.
The real question isn’t “How much does advice cost?”. It’s “What could it cost me if I don’t get it?”
Protect Your Whānau’s Future Today
Your future deserves clarity and confidence. Our advisers offer personalised guidance to help you choose the right cover for your needs. Get in touch for a free, obligation-free conversation.
Click here to connect with our Insurance advisers: https://peaceofmindadvice.co.nz/contact-us/
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