The Fair Insurance Code Explained

What is the Fair Insurance Code?

The Fair Insurance Code is a code of practice developed and administered by the Insurance Council of New Zealand (ICNZ). It sets minimum standards for how member insurers must deal with their customers across every stage of the insurance relationship - from selling policies through to handling claims and resolving complaints.

Think of it as a rulebook for fair behaviour. While New Zealand has legislation that governs insurers (such as the Financial Markets Conduct Act and the Contracts of Insurance Act 2024), the Fair Insurance Code goes further in some areas, setting industry-specific expectations that ICNZ members have voluntarily committed to meeting.

The Code was first introduced in 2016 and has been updated several times since. The most recent update, in 2024, strengthened protections around claims handling, vulnerability, and natural disasters - reflecting hard-won lessons from events like Cyclone Gabrielle and the Auckland Anniversary floods.

For consumers, the Fair Insurance Code is one of the most practical tools available. It gives you a clear framework for what to expect from your insurer, and something concrete to point to if those expectations are not being met. If you have ever felt that your insurer was dragging their feet, being vague about a decision, or making it difficult to complain, the Code is likely on your side.

Who Does the Fair Insurance Code Apply To?

The Fair Insurance Code applies to all insurers that are members of the Insurance Council of New Zealand (ICNZ). This includes most of the major general insurers operating in New Zealand, such as AA Insurance, AMI, IAG, State, Tower, and Vero. Between them, ICNZ members cover the vast majority of personal insurance policies in the country.

It is worth checking whether your insurer is an ICNZ member. You can do this on the ICNZ members page. If they are, the Fair Insurance Code applies to your relationship with them and you can hold them to the standards it sets.

Some insurance brands operating in New Zealand are not ICNZ members. In those cases, the Fair Insurance Code does not formally apply. However, those insurers are still bound by the legal requirements under the Financial Markets Conduct Act, the Contracts of Insurance Act 2024, and FMA regulation. The Code sits on top of these legal requirements as an additional layer of protection for consumers of ICNZ member insurers.

The Code covers personal insurance products - car, house, contents, travel, and similar consumer policies. It does not cover commercial or business insurance, though ICNZ members are expected to apply the same principles of fairness in those dealings as well.

It is also worth noting that the Code applies to the insurer, not to brokers or intermediaries who may sell the policy on their behalf. If you purchased insurance through a broker and have a complaint about the broker's conduct, that is a separate matter - though your insurer remains responsible for how claims and complaints are handled under the Code.

Key Commitments and What They Mean in Practice

The Fair Insurance Code contains a number of specific commitments that ICNZ member insurers must meet. These cover how policies are sold, how claims are handled, how complaints are managed, and how vulnerable customers are treated. The table below sets out the key commitments and translates each one into what it means for you as a policyholder.

These are not vague aspirations. They are standards your insurer has committed to, and the IFSO can consider whether they have been met when assessing a dispute. If your insurer falls short of these commitments, that is something you can raise in a complaint.

The Code in Practice: Buying, Claims, and Complaints

The Fair Insurance Code is not just a document that sits on a shelf. It applies to the three main stages of your insurance relationship - buying a policy, making a claim, and raising a complaint. Here is how it works at each stage.

Buying a Policy
When you are shopping for insurance, the Code requires your insurer to give you clear, accurate information about the product before you commit. This means plain-language descriptions of what is covered and what is not, transparent pricing, and honest marketing. The insurer should help you understand the key features and limitations of the policy so you can make an informed decision. They must not use pressure tactics to rush you into a purchase.

Making a Claim
This is where the Code has the most day-to-day impact for most policyholders. When you lodge a claim, the insurer must acknowledge it within five working days, assign someone to handle it, and keep you informed of progress. They must process your claim fairly and without unnecessary delays. If they need more information from you, they should ask promptly and clearly. When a decision is made, they must explain it in plain language and point to the specific policy terms. If the claim is declined, they must tell you how to challenge the decision.

Raising a Complaint
If something goes wrong and you are unhappy with how your insurer has handled your policy or claim, the Code requires the insurer to have a clear, accessible complaints process. They must acknowledge your complaint, investigate it fairly, and respond within reasonable timeframes. If their internal process does not resolve the issue, they must tell you about the IFSO - a free dispute resolution service that can make binding decisions on insurers. For a full guide to the complaints process, see our guide on how to complain about your insurer.

The Code also covers how insurers should behave during large-scale events like natural disasters. After Cyclone Gabrielle and the Auckland floods, many consumers experienced long delays and poor communication from their insurers. The 2024 updates to the Code addressed this directly, requiring insurers to have clear processes for managing surges in claims and to communicate proactively with affected policyholders.

The 2024 Updates to the Fair Insurance Code

The Fair Insurance Code was updated in 2024 to reflect lessons learned from New Zealand's recent major weather events and broader changes in consumer expectations. These updates strengthened several areas of the Code and introduced new provisions that give consumers more protection.

One of the biggest changes relates to natural disaster claims handling. The updated Code requires insurers to have specific processes for managing large-scale events, including proactive communication with affected policyholders, dedicated claims teams, and realistic timeframe commitments. This was a direct response to the widespread frustration many New Zealanders experienced after the 2023 flooding and cyclone events, where some policyholders waited months without meaningful updates on their claims.

The 2024 updates also strengthened the vulnerability provisions. Insurers must now take greater care when dealing with customers who may be vulnerable due to financial hardship, health conditions, disability, age, language barriers, or the impact of a traumatic event. This means insurers should proactively identify vulnerability and adjust their approach accordingly - for example, by allowing more time for responses, providing information in alternative formats, or offering access to support services.

Claims handling timeframes received more attention in the updated Code. While the original Code set a five-working-day acknowledgement standard, the 2024 version places greater emphasis on ongoing communication and realistic progress updates throughout the life of a claim. Insurers must not leave policyholders in the dark about what is happening with their claim.

The updated Code also reinforces the requirement for transparency around policy changes at renewal. If your insurer changes the terms of your policy, they must clearly communicate what has changed and why. This prevents the situation where cover is quietly reduced without the policyholder realising.

You can read the full updated Code on the ICNZ website. The Consumer NZ website also has useful commentary on what the changes mean for policyholders.

• Natural disaster preparedness - insurers must have specific processes for handling surges in claims during large-scale events
• Proactive communication - insurers must keep policyholders informed during events, not wait for them to chase updates
• Stronger vulnerability provisions - greater duty to identify and support customers experiencing hardship or difficulty
• Claims progress updates - emphasis on regular, realistic updates throughout the claims process, not just initial acknowledgement
• Renewal transparency - clear communication about any changes to policy terms or cover at renewal time

How to Use the Code If Something Goes Wrong

Knowing about the Fair Insurance Code is one thing. Knowing how to use it when your insurer is not treating you fairly is what really matters. If you feel your insurer has fallen short of the standards set out in the Code, here is how to put it to work.

The key is to be specific. Rather than making a general complaint about poor service, identify which part of the Code your insurer has breached and reference it directly. For example, if your insurer took three weeks to acknowledge your claim, you can point out that the Code requires acknowledgement within five working days. If they declined your claim without a clear explanation, you can reference the Code's requirement to provide written reasons citing specific policy terms.

This approach works because it shifts the conversation from subjective dissatisfaction to an objective standard that the insurer has committed to meeting. It also signals to the insurer (and later to the IFSO, if it gets that far) that you know your rights and are prepared to hold them accountable.

If your complaint is not resolved through your insurer's internal process, the IFSO will consider whether the insurer met its obligations under the Fair Insurance Code when assessing your dispute. A clear breach of the Code strengthens your position. For a full walkthrough of the complaints and escalation process, see our guide to complaining about your insurer.

The Code vs the Law: How They Work Together

One question that comes up often is whether the Fair Insurance Code has legal force. The short answer is: not directly. The Code is a voluntary industry standard, not legislation. Your insurer cannot be fined or prosecuted solely for breaching the Code in the way they could for breaching the Financial Markets Conduct Act.

However, the Code carries real weight in practice. When the IFSO investigates a complaint, they consider whether the insurer has met the standards set by the Fair Insurance Code. A breach of the Code can influence the outcome of a dispute, even if the breach is not a legal violation in itself. The Code is treated as evidence of what the industry considers acceptable practice.

The Code also works alongside - and in some areas goes beyond - the legal requirements. For example, while the Contracts of Insurance Act 2024 requires insurers to handle claims in a "reasonable and timely manner," the Fair Insurance Code specifies that claims must be acknowledged within five working days and that complaints should be resolved within set timeframes. These specific benchmarks give consumers something concrete to point to.

The FMA also takes note of industry codes when assessing whether insurers are meeting their conduct obligations. An insurer that consistently falls short of the Fair Insurance Code may attract regulatory attention, even if they have not technically broken the law.

For consumers, the practical takeaway is straightforward: the Fair Insurance Code gives you an additional set of standards to hold your insurer to, on top of their legal obligations. Used together, the Code and the law provide a strong framework for fair treatment. The Consumer Protection website has further information about your legal rights as an insurance consumer in New Zealand.

Making the Code Work for You

The Fair Insurance Code is only as useful as your willingness to use it. Here are some practical ways to make it work in your favour as an insurance consumer in New Zealand.

Read the Code. It is not long, and the ICNZ website makes it easy to access. Knowing what your insurer has committed to puts you in a much stronger position if something goes wrong. You do not need to memorise it - just knowing it exists and where to find it is enough.

Check your insurer's membership. Before you buy a policy (or if you already have one), confirm that your insurer is an ICNZ member. If they are, the Code applies. If they are not, you still have legal protections, but the Code's specific commitments will not apply.

Reference the Code in complaints. If you are making a complaint about your insurer, citing the relevant Code commitment adds weight to your case. It shows you are informed and that you have objective standards to back up your position. This is particularly effective when escalating to the IFSO.

Keep records. The Code sets timeframes for things like claim acknowledgement and complaint responses. Keeping a record of dates and communications allows you to hold your insurer accountable if those timeframes are not met.

Use it alongside other resources. The Fair Insurance Code is one tool in your toolkit. Combine it with your rights under the Contracts of Insurance Act 2024, the FMA's conduct requirements, and practical guidance from organisations like the Citizens Advice Bureau and Consumer NZ.

If you are comparing insurance options, getting estimates from multiple providers on Compare.org.nz can help you see how different insurers stack up. And for a broader overview of your rights as a policyholder, see our guide to car insurance rights and our guide to making a claim.