How Insurance Advisers Get Paid NZ: Commissions Explained | QuoteHub

By QuoteHub Editorial Team · Updated 2025-11-13

How Insurance Advisers Get Paid in NZ: Commissions, Fees, and What It Means for You

If you have ever wondered whether using an insurance adviser costs you money, you are not alone. It is one of the most common questions New Zealanders ask before seeking advice. The short answer is that most insurance advisers do not charge you a fee. Instead, they earn commission paid by the insurer when they place a policy on your behalf.

That commission structure shapes the entire advice industry in New Zealand. Understanding how it works helps you assess the advice you receive, ask the right questions, and make better decisions about your cover.

This guide explains exactly how insurance adviser commissions work in NZ, what the different structures look like across insurers, where potential conflicts arise, and how regulation addresses them.

Why Advisers Do Not Charge You Directly

In most cases, when you work with an authorised financial adviser in New Zealand, you pay nothing for their time, research, or recommendations. The insurer pays the adviser a commission when a policy is placed and maintained.

This model exists because insurers want distribution. They need advisers to explain their products, match them to customers, and handle the application process. Rather than employing thousands of salespeople directly, insurers outsource distribution to independent advisers and adviser firms, paying them commission in return.

From your perspective, the premium you pay is the same whether you go directly to an insurer or through an adviser. The commission is built into the insurer's cost structure, not added on top of your premium. This means you get professional advice, product comparison, and ongoing support at no additional cost.

A small number of advisers in New Zealand do charge fees, either instead of or in addition to commissions. Fee-based advisers typically charge an hourly rate or a flat project fee. If an adviser intends to charge you a fee, they are legally required to disclose this before providing advice.

How Commission Structures Work

Insurance adviser commissions in NZ have two components: upfront commission and trail commission. Understanding both is important because they create different incentives.

Upfront commission

When an adviser places a new policy for you, the insurer pays them an upfront commission. This is typically calculated as a percentage of your first year's annual premium (also called annualised premium income, or API).

Upfront commission rates in New Zealand generally range from 100% to 200% of the first year's premium. That means if your annual premium is $2,000, the adviser might receive between $2,000 and $4,000 as a one-off payment when the policy is placed.

This sounds like a lot, but it reflects the work involved: understanding your financial situation, researching products across multiple insurers, preparing a statement of advice, completing the application, managing underwriting, and setting up the policy. For complex cases, this process can take many hours across several weeks.

Trail commission

Once a policy is in force, the adviser receives an ongoing trail commission for as long as you hold the policy. Trail commission is typically 5% to 15% of your annual premium each year.

Trail commission is designed to compensate the adviser for ongoing service: answering your questions, conducting annual reviews, helping with claims, and updating your cover as your life changes. It also incentivises advisers to place policies that clients keep rather than cancel after a few months.

The relationship between upfront and trail

Most insurers offer advisers a choice between different commission models. The general trade-off is:

Some insurers offer a single fixed structure. Others let advisers choose from two or three options. The model an adviser selects can tell you something about their approach to client relationships.

Commission Structures by Insurer

Commission rates vary across New Zealand's major life insurers. The following table provides a general guide to the commission structures available in the market as of 2026. Exact rates depend on the adviser's agreement with each insurer and may vary by product type.

Insurer Upfront Commission (% of first year premium) Trail Commission (% of annual premium) Notes
Partners Life Up to 200% 7.5% to 10% Multiple commission models available
AIA New Zealand Up to 200% 7.5% to 10% Standard industry commission levels
Asteron Life Up to 200% 7.5% to 10% Suncorp-owned, standard commission structure
Fidelity Life Up to 130% 10% to 15% Reduced upfront model, potentially lower premiums
nib NZ Up to 200% 7.5% to 10% Varies by product type
Chubb Life Up to 200% 7.5% to 10% Primarily distributed through adviser channel

These figures are indicative and based on publicly available information and industry sources. Individual adviser agreements may differ.

The Fidelity Life Model: Lower Commissions, Lower Premiums

Fidelity Life, New Zealand's largest locally owned life insurer, takes a different approach to adviser remuneration. Their commission structure pays a lower upfront commission compared to most competitors, typically capping at around 130% of first year premium rather than the 200% offered elsewhere.

This matters because commission is a cost to the insurer, and that cost is factored into the premiums they charge. By paying advisers less commission, Fidelity Life can offer more competitive premiums on certain products.

For you as a consumer, this means a Fidelity Life policy may be cheaper than an equivalent policy from an insurer paying higher commissions, even though the cover itself is comparable. It also means that some advisers may be less inclined to recommend Fidelity Life products because they earn less from placing them.

This is not a criticism of advisers generally. Most authorised advisers will recommend the best product for your situation regardless of commission. But it is a dynamic worth understanding, and it is one reason why comparing quotes across multiple insurers matters.

When you compare life insurance in NZ, pay attention to both the premium and the product features. A lower premium does not always mean less cover, and a higher premium does not always mean better cover.

FMA Regulation and Disclosure Requirements

The Financial Markets Authority (FMA) regulates financial advice in New Zealand under the Financial Markets Conduct Act 2013 and the Financial Markets Conduct (Regulated Financial Advice Disclosure) Regulations 2020.

These regulations impose specific requirements on how advisers disclose their remuneration.

What advisers must disclose

Every authorised financial adviser and financial advice provider must provide you with a disclosure statement. This document must include:

When disclosure must happen

Advisers must provide this disclosure before or at the time they give you advice. In practice, most advisers share their disclosure statement during the first meeting or at the start of the advice process.

You do not need to ask for it. The adviser is legally required to provide it. If an adviser does not disclose how they are paid, that is a red flag.

The duty to prioritise your interests

Under the Code of Professional Conduct for Financial Advice Services, advisers who give advice on insurance products have a duty to ensure their advice is suitable for your circumstances. When there is a conflict of interest, the adviser must manage that conflict in a way that prioritises your interests.

This means an adviser cannot simply recommend the product that pays them the highest commission if a different product would be more suitable for you. The regulations do not eliminate conflicts of interest, but they do create legal accountability when conflicts are not properly managed.

Potential Conflicts of Interest

Commission-based remuneration creates several potential conflicts. Being aware of them helps you evaluate the advice you receive.

Recommending higher-premium products

Because commission is a percentage of premium, an adviser earns more from a policy with a higher premium. This could theoretically incentivise recommending more cover than you need, or recommending a more expensive insurer when a cheaper one would provide equivalent cover.

Favouring high-commission insurers

When two products are broadly similar but one pays significantly higher commission, there is a natural incentive to recommend the higher-paying option. This is particularly relevant when comparing insurers like Fidelity Life (lower commission) against others (higher commission).

Replacement business (churning)

An adviser who replaces an existing policy with a new one earns a fresh upfront commission. While replacement is sometimes genuinely in your interest (better cover, lower premiums, improved terms), it can also be motivated by the new commission payment. This practice, when done without genuine benefit to the client, is known as churning.

The FMA and insurers actively monitor replacement business. Advisers must justify replacements and demonstrate that the new policy is in the client's best interest.

How regulation addresses these conflicts

The regulatory framework does not ban commissions. Instead, it requires transparency, creates duties to act in clients' interests, and establishes oversight mechanisms. The FMA can investigate and take enforcement action against advisers who breach their obligations, including fines and removal of their authorisation.

What to Ask Your Insurance Adviser

Informed clients get better outcomes. Here are the questions worth asking any adviser before they recommend a product.

"How are you paid for this advice?" They are required to tell you, but asking directly sets the right tone. Listen for whether they receive upfront commission, trail commission, fees, or a combination.

"Do you receive different commission rates from different insurers?" This tells you whether there is a financial incentive to recommend one insurer over another.

"Why are you recommending this specific insurer and product?" A good adviser will explain the reasoning based on your needs, not just the product features. If they cannot articulate why this product suits you specifically, ask for more detail.

"Have you compared products from multiple insurers?" Some advisers only work with one or two insurers. Others compare across the full market. Knowing this helps you understand how comprehensive the advice is.

"What happens if I need to make a claim?" This tells you about the ongoing service you will receive, which is partly what trail commission pays for.

"Are you authorised under a Financial Advice Provider licence?" All advisers giving personalised insurance advice in NZ must operate under an FAP licence. You can check their registration on the Financial Service Providers Register.

How QuoteHub Approaches This

At QuoteHub, we believe transparency about how insurance advice works is fundamental to helping New Zealanders make good decisions.

Our platform is designed to let you compare insurance options across multiple insurers so you can see the differences in cover and pricing side by side. We work with authorised advisers who compare across the market and are required to disclose their commission arrangements to you.

We do not sell insurance directly. We connect you with authorised advisers who can provide personalised advice based on your situation. This means you get professional guidance at no cost to you, with full visibility into how the adviser is compensated.

If you are unsure whether your current insurance is right for you, or if you want to understand whether you are paying more than you need to, a free insurance review takes about two minutes to start.

The Bottom Line

Insurance adviser commissions are not inherently good or bad. They are a distribution model that allows New Zealanders to access professional advice without paying out of pocket. The key is understanding how the model works so you can evaluate the advice you receive.

Here is what matters most:

  1. You do not pay the adviser directly. Commission is paid by the insurer and is already factored into premiums.
  2. Commission rates vary by insurer. This can create incentives, which is why comparing across multiple insurers is important.
  3. Advisers must disclose how they are paid. If they do not, that is a regulatory breach.
  4. Lower-commission insurers like Fidelity Life may offer lower premiums. Make sure your adviser includes these options in their comparison.
  5. Ask questions. An adviser who is transparent about their remuneration is more likely to be transparent about everything else.

The best protection against conflicts of interest is an informed consumer. Now that you understand how insurance advisers get paid in NZ, you are better equipped to have that conversation.

Frequently Asked Questions

Do I have to pay an insurance adviser in NZ?

In most cases, no. The vast majority of insurance advisers in New Zealand are paid by commission from the insurer, not by charging you a fee. Your premium is the same whether you go through an adviser or directly to the insurer. A small number of advisers charge fees for their services, but they must disclose this before giving you advice.

How much commission do insurance advisers earn?

Upfront commission is typically 100% to 200% of your first year's annual premium. Trail commission is usually 5% to 15% of your annual premium each year for as long as you hold the policy. The exact rates depend on the insurer and the adviser's agreement with them.

Does adviser commission increase my premiums?

Not directly. Commission is a cost to the insurer that is built into their overall pricing model. You pay the same premium whether you use an adviser or go direct. However, insurers with lower commission structures (such as Fidelity Life) may be able to offer lower premiums because their distribution costs are lower.

What is the difference between upfront and trail commission?

Upfront commission is a one-off payment the adviser receives when a new policy is placed. Trail commission is an ongoing payment received each year for as long as the policy remains active. Upfront commission compensates for the initial advice and setup work. Trail commission compensates for ongoing service, annual reviews, and claims support.

Can I find out exactly how much my adviser earns from my policy?

Yes. Under New Zealand law, advisers must disclose the nature and source of their remuneration. You can ask your adviser directly for the specific commission percentage or dollar amount they receive. They are required to be transparent about this. If you want to understand common insurance terms and jargon, our guide covers the key definitions.

Is it better to use a fee-based adviser?

Not necessarily. Fee-based advice removes commission-related conflicts, but it introduces a direct cost that commission-based advice does not. For most New Zealanders, a commission-based adviser who compares across multiple insurers and discloses their remuneration transparently provides good value. The most important factor is whether the adviser genuinely compares across the market and recommends what suits your situation.

How do I check if my adviser is properly authorised?

You can search for any financial adviser or financial advice provider on the Financial Service Providers Register at fspr.govt.nz. All advisers giving personalised financial advice must be registered and operate under a Financial Advice Provider (FAP) licence. You can also check the FMA's Financial Service Providers Register for any disciplinary history.

First, raise the issue directly with the adviser and their Financial Advice Provider. If you are not satisfied with the response, you can lodge a complaint with the adviser's dispute resolution scheme (either Financial Services Complaints Limited or the Insurance and Financial Services Ombudsman). You can also report concerns to the FMA. If your adviser recommended a product that was not suitable for your circumstances, you may have grounds for a formal complaint. Consider reviewing your insurance with a different adviser for a second opinion.

Disclaimer: This article is for informational purposes only and does not constitute personalised financial advice. Insurance products and adviser commission structures can change. For advice tailored to your situation, speak with an authorised financial adviser. QuoteHub is operated under FSP 712931. Information is current as at March 2026.

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