New Zealand has multiple layers of regulation designed to protect insurance consumers - from government agencies that supervise insurers to industry codes and dispute resolution services. This guide explains who does what, how the pieces fit together, and what it all means for you as a policyholder.
Insurance regulation in New Zealand is not handled by a single body. Instead, several organisations share the responsibility - each with a different focus. Some supervise the financial health of insurers, others regulate how they treat customers, and others provide a safety net when things go wrong.
If you have ever wondered who is looking out for you as an insurance consumer, the short answer is: quite a few organisations, each tackling a different part of the picture. The longer answer is the subject of this guide.
At a high level, insurance regulation in NZ involves government regulators (the Financial Markets Authority and the Reserve Bank of New Zealand), legislation (the Contracts of Insurance Act 2024 and the Financial Markets Conduct Act), an industry body (the Insurance Council of New Zealand), and a dispute resolution service (the Insurance & Financial Services Ombudsman).
Understanding who does what can help you know where to turn if something goes wrong - and gives you a better sense of the protections that are in place before anything goes wrong at all.
The Financial Markets Authority (FMA) is New Zealand's primary conduct regulator for financial services, including insurance. Its role is to ensure that insurers and other financial institutions treat their customers fairly.
The FMA's powers come mainly from the Financial Markets Conduct Act 2013 (FMCA). Under this Act, insurers must not make misleading or deceptive representations about their products. Marketing materials, policy documents, and communications with customers must be accurate and not designed to confuse.
The FMA can investigate insurers that may be breaching their obligations, issue warnings, take enforcement action, and in serious cases, pursue court proceedings. It also publishes guidance for the industry on what fair conduct looks like in practice - covering areas such as product design, sales practices, and complaints handling.
For consumers, the FMA is worth knowing about because it sets the baseline for how insurers must behave. If an insurer is engaging in misleading conduct or unfair sales practices, the FMA is the body with the power to step in. You can report concerns directly to the FMA through their contact page.
The FMA also plays a key role in licensing. Insurers operating in New Zealand must hold the appropriate licence, and the FMA oversees this process. This means there is a formal gateway before an insurer can sell products to New Zealand consumers.
While the FMA focuses on how insurers treat their customers, the Reserve Bank of New Zealand (RBNZ) focuses on whether insurers are financially sound. This is known as prudential supervision.
The RBNZ's insurance oversight is governed by the Insurance (Prudential Supervision) Act 2010 (IPSA). Under IPSA, all insurers operating in New Zealand must be licensed by the RBNZ and meet ongoing requirements around capital adequacy, solvency, risk management, and governance.
In simple terms, the RBNZ makes sure that insurers have enough money to pay claims - not just today, but in the future. This matters because insurance is a promise: you pay premiums now, and the insurer promises to pay if something goes wrong later. If the insurer runs out of money, that promise is worthless. Prudential supervision exists to prevent that scenario.
The RBNZ sets minimum capital requirements, monitors insurers' financial positions, requires regular reporting, and can intervene if an insurer is in financial trouble. In extreme cases, the RBNZ can place an insurer into statutory management to protect policyholders.
For most consumers, RBNZ regulation works quietly in the background. You may never interact with it directly. But it is one of the most important protections you have - it is the reason you can generally trust that your insurer will be able to pay your claim when the time comes.
The Conduct of Financial Institutions regime - commonly known as CoFI - is one of the most significant changes to insurance regulation in New Zealand in recent years. It came into effect in 2025 and is overseen by the FMA.
CoFI requires banks, insurers, and non-bank deposit takers to obtain a licence from the FMA confirming that they meet conduct standards. At its heart is a single, powerful obligation: these institutions must treat their customers fairly.
What does "treating customers fairly" mean in practice? Under CoFI, insurers must design products that genuinely meet consumer needs, provide clear and honest information, handle claims and complaints in a way that is fair and timely, and pay particular attention to vulnerable customers. They must also have internal systems, policies, and governance in place to ensure fair conduct is embedded across the business - not just a marketing slogan.
CoFI was introduced because existing regulation was seen as having gaps. Before CoFI, the FMA could act on misleading conduct, but there was no overarching duty for financial institutions to treat customers fairly. CoFI fills that gap by creating a proactive obligation - insurers must actively demonstrate fair conduct, not just avoid the worst behaviour.
For consumers, CoFI is a significant step forward. It means the FMA now has stronger tools to hold insurers accountable for how they design products, sell policies, handle claims, and deal with complaints. If an insurer's conduct falls short of the fair treatment standard, the FMA can take enforcement action under CoFI.
The Contracts of Insurance Act 2024 replaced the outdated Insurance Law Reform Act 1977 and several related pieces of legislation. It modernises the law governing the relationship between insurers and policyholders in New Zealand.
One of the most important changes under the new Act is the shift from a duty of disclosure to a duty to take reasonable care not to make a misrepresentation. Previously, consumers had to proactively disclose anything that might be relevant to their insurance - even if the insurer did not ask about it. Under the new Act, the onus shifts. The insurer must ask the right questions, and the consumer must take reasonable care to answer them honestly and accurately. This is a much fairer approach and brings New Zealand into line with international best practice.
The Act also introduces clearer rules around unfair contract terms in insurance policies. Terms that create a significant imbalance between the insurer and the policyholder, and are not reasonably necessary, can be challenged. This is designed to address the historic problem of overly restrictive policy terms buried in fine print.
Other key provisions include clearer rules on when an insurer can cancel or avoid a policy, protections for third-party claimants (for example, if you are injured by an uninsured driver), and provisions around subrogation (the insurer's right to recover costs from a third party after paying a claim).
For consumers, the Contracts of Insurance Act 2024 is a significant improvement. It modernises the rules governing your insurance contract, shifts more of the burden onto insurers to ask the right questions, and provides stronger protections against unfair terms. You can read the full Act on legislation.govt.nz.
The Insurance Council of New Zealand (ICNZ) is the industry body representing general insurers in New Zealand. While it is not a government regulator, it plays an important role in setting standards through the Fair Insurance Code.
The Fair Insurance Code is a voluntary code of practice that all ICNZ member insurers commit to following. It sets minimum standards for how insurers deal with customers, covering areas such as clear communication, claims handling timeframes, complaints processes, and treatment of vulnerable customers. The Code was most recently updated in 2024, strengthening protections around natural disaster claims and vulnerability.
Most major general insurers in New Zealand are ICNZ members - including AA Insurance, AMI, IAG, State, Tower, and Vero. You can check whether your insurer is a member on the ICNZ members page.
The Fair Insurance Code is not legislation, but it carries real weight. The IFSO considers whether insurers have met the Code's standards when assessing disputes, and a breach can influence the outcome. It serves as a practical benchmark for acceptable insurer behaviour.
For a detailed breakdown of the Code's requirements, timeframes, and how to use it if your insurer falls short, see our guide to the Fair Insurance Code.
The Insurance & Financial Services Ombudsman (IFSO) is New Zealand's approved dispute resolution scheme for insurance. If you have a dispute with your insurer that you cannot resolve through their internal complaints process, the IFSO is your next step.
The IFSO is free for consumers to use. It is funded by the financial services industry, not by taxpayers or complainants. This means there is no cost to you for making a complaint, regardless of the outcome.
The IFSO can investigate complaints about most types of insurance, including car, house, contents, travel, health, and life insurance. It can make decisions that are binding on the insurer (up to $400,000 in value), though the consumer is not bound - if you disagree with the IFSO's decision, you can still take the matter to court.
When assessing a dispute, the IFSO considers the law (including the Contracts of Insurance Act and the Financial Markets Conduct Act), the policy wording, the Fair Insurance Code, and what is fair and reasonable in the circumstances. This broad mandate means the IFSO can sometimes find in favour of consumers even where the strict policy wording might not support their claim.
All insurers operating in New Zealand are required by law to belong to an approved dispute resolution scheme. For most general insurers, that scheme is the IFSO. You can check which scheme your insurer belongs to on the IFSO participants page.
For a step-by-step guide to the complaints process, see our guides on how to complain about your insurer and what is the IFSO.
With so many organisations and pieces of legislation involved, it is worth stepping back to see how the full picture comes together. Each part of the regulatory framework has a specific role, and together they create multiple layers of protection for insurance consumers in New Zealand.
The framework works in layers. At the base, the RBNZ ensures insurers are financially sound and able to pay claims. On top of that, the FMA ensures insurers treat customers fairly - with CoFI providing the overarching fair conduct obligation and the Financial Markets Conduct Act prohibiting misleading behaviour. The Contracts of Insurance Act governs the actual contract between you and your insurer, setting rules around disclosure, unfair terms, and cancellation. The ICNZ's Fair Insurance Code adds another layer of industry-specific standards for member insurers. And the IFSO provides a free, accessible way to resolve disputes when something goes wrong.
No single body does everything. But the system is designed so that gaps are covered. If your insurer treats you unfairly, the FMA can investigate. If they are not meeting industry standards, the IFSO can consider the Fair Insurance Code. If they are in financial trouble, the RBNZ can intervene. And if your contract contains unfair terms, the Contracts of Insurance Act gives you grounds to challenge them.
| Body | Role | What It Means for You |
|---|---|---|
| RBNZ | Prudential supervision under IPSA - licenses insurers, sets capital requirements, monitors financial health | Your insurer is required to have enough money to pay claims. If they get into trouble, the RBNZ can step in to protect policyholders. |
| FMA | Conduct regulation under the FMCA and CoFI - ensures fair treatment, investigates misconduct, enforces standards | Your insurer must treat you fairly, provide clear information, and not mislead you. The FMA can take action if they do not. |
| CoFI regime | Fair conduct licensing for banks, insurers, and NBDTs - proactive obligation to treat customers fairly | Insurers must design fair products, communicate honestly, and handle claims and complaints fairly. The FMA enforces this. |
| Contracts of Insurance Act | Governs the legal relationship between insurer and policyholder - disclosure, unfair terms, cancellation | You only need to answer the insurer's questions honestly (not guess what to disclose). Unfair contract terms can be challenged. |
| ICNZ | Industry body - administers the Fair Insurance Code setting minimum standards for member insurers | If your insurer is an ICNZ member, they must meet standards for claims handling, complaints, communication, and vulnerability. |
| IFSO | Approved dispute resolution scheme - free, binding decisions on complaints up to $400,000 | If your insurer's complaints process does not resolve your issue, you can escalate to the IFSO at no cost. |
Regulation works best when consumers know it exists and understand how to use it. Here are the practical takeaways from New Zealand's insurance regulatory framework.
Your insurer must be licensed. Both the RBNZ (for financial soundness) and the FMA (for conduct) require insurers to hold licences. Before buying a policy, it is worth checking that your insurer is on the RBNZ licensed insurers register and the Financial Service Providers Register.
You have a right to clear information. Under the Financial Markets Conduct Act, CoFI, and the Fair Insurance Code, your insurer must provide accurate, plain-language information about your policy - what it covers, what it excludes, what it costs, and how to make a claim.
You only need to answer honestly. Under the Contracts of Insurance Act 2024, your duty is to take reasonable care not to make a misrepresentation when answering your insurer's questions. You do not need to volunteer information the insurer has not asked about.
You can challenge unfair terms. If your policy contains terms that are significantly unfair or not reasonably necessary, the Contracts of Insurance Act gives you grounds to challenge them.
You have a free complaints pathway. If something goes wrong, you can complain to your insurer first, and if that does not resolve things, escalate to the IFSO at no cost. The IFSO can make binding decisions on insurers up to $400,000.
You can report misconduct. If you believe an insurer is behaving unlawfully or unfairly, you can report your concerns to the FMA or to Consumer Protection.
Understanding these protections does not guarantee a smooth experience with every insurer. But it does mean you are better equipped to hold your insurer to account if things go wrong. For more on your rights as a policyholder, see our guide to your rights as a car insurance policyholder in NZ.
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