The Financial Markets Authority will start policing insurance brokers and advisers under the new Contracts of Insurance Act from 15 November 2027, it said on its intermediaries guidance page.
That oversight applies whether or not an intermediary gives regulated financial advice. The FMA says that for some of them, "this may be their first experience with the FMA".
The regulator wants them to get moving now. "We expect intermediaries to take a proactive approach to implementation," it says.
It wants them to check how the Act affects their business and change their policies, processes, systems, controls and governance before the Act starts. It also wants them talking to their insurer partners about their preparations.
The biggest change is a new duty for what the Act calls "specified intermediaries". That's anyone who arranges a contract, is paid commission or another payment by or for the insurer, and isn't an insurer's employee.
On consumer policies, such as most home, contents, private car, travel, life and health cover, they must take reasonable steps to pass on what the client told them that's relevant to the insurer's questions. That has to happen before the contract is signed or changed.
On non-consumer (mostly business) policies, they must take reasonable steps to disclose every material circumstance known to anyone working for them on the contract.
A court can order an intermediary who breaches the duty to compensate the insurer for its loss. The parties can contract out of the duties.
A fee-only adviser, paid only by the client and never by an insurer, wouldn't count as a specified intermediary.
Brokers also get a change on payments. For non-consumer policies, they will have to pay insurer money on to policyholders "as soon as reasonably practicable" rather than within 7 days.
The 7-day timeframe still applies to consumer contracts, the FMA says.
The Act also brings in the split between consumer and non-consumer contracts. A consumer contract is one taken out wholly or mostly for personal, domestic or household purposes.
Policyholders on consumer contracts must take reasonable care not to make a misrepresentation. Non-consumer policyholders must make a fair presentation of the risk.
The FMA says the Act replaces the common law policyholder's duty of disclosure, and carries over and updates some existing rules for intermediaries from the Insurance Intermediaries Act 1994.
