A review of existing cover can end in one of three places. Something is missing and should be added. Something has changed and the structure no longer fits. Or everything is where it should be, and the right course is to leave it alone.
The third outcome takes as long to reach as the other two. It is also the only one that generates no new commission.
On 30 June the Financial Markets Authority published its Financial Conduct Report for 2026/27, and managing the conflicts that arise from how advisers are paid sits on its list of priorities for the year ahead.
The report, in the regulator’s own words
The FMA will focus on whether advice firms have effective processes and controls to manage conflicts of interest arising from commissions, upfront and ongoing alike. It records that it is aware of unmanaged conflicts leading to “poor or unsuitable advice, inappropriate replacement business and fraudulent activity”, of high upfront commissions across life, health and disability insurance and KiwiSaver, and of inconsistencies in how advisers disclose ongoing, or servicing, commission.
Speaking at Financial Advice New Zealand’s Policy Summit on 28 July, chief executive Samantha Barrass drew the boundary carefully. “The FMA is not opposed to commission, nor leading a review on the level of commissions,” she said. “It is one of several legitimate forms of remuneration in these sectors. Our focus is on how conflicts are managed, which is a regulatory requirement.”
That distinction matters. Commission is what puts advice within reach of people who would never write a cheque for it. The conflict it creates is real, long understood, and manageable.
A new policy pays a multiple of an old one
When a new policy is written, the adviser receives an upfront commission calculated as a percentage of the first year’s premium. For each subsequent year the policy remains in force, a smaller renewal commission is paid; the industry calls this the trail, or the servicing commission, and it is the same payment under each name. The gap between the two figures is wide, and a policy left alone earns the renewal only.
The FMA examined the consequences of that once in detail. In June 2016 it took four years of data from the twelve life insurers then operating and modelled what predicted whether a policy was replaced. The strongest factor was the commission structure attached to it; the next was whether the clawback period had ended. The quality of the policy itself, measured by the product scores advisers use to rate policy features, was “only a minor factor”.
The advice regime has been rebuilt since then and the market with it. The arithmetic has not changed shape.
The second medical
A replacement policy is underwritten afresh, against the health you have now rather than the health you had when the original was issued. Anything diagnosed in the intervening years is disclosable. It may be excluded from the new policy, loaded, or declined outright, while the original policy, already in force, covered it without question.
This is how a change can look like a saving for a decade and then fail at the only moment that counts. The FMA’s 2016 report set the mechanism out in a hypothetical case: a couple move both life and health cover on advice, and two years later a heart attack claim is declined by both new insurers, because the medical records showed heart problems predating the change.
None of which makes replacement wrong. Wordings improve, and sometimes an existing policy no longer does the work. The test is whether the reason to move sits in the policy, and whether what is being given up has been written down and understood before anything is signed.
The annual payment, and the annual conversation
Barrass raised a second point at the summit. “We have also seen situations where there is a disconnect between commissions and the servicing expected over the lifetime of a product.” Her example was the KiwiSaver trail: the annual payment arriving without the annual conversation.
The FMA’s review of access to financial advice, published in March 2026, found the same pattern. Among the KiwiSaver providers and advisers it examined, around 10% of clients engaged in an annual review. It published no equivalent figure for life insurance, but it did record that product providers told the FMA they had expectations of advisers providing ongoing servicing, and that advisers said commercial realities can at times prioritise new business over servicing.
Renewal commission is payment for something, and a client is entitled to know what.
Visible from outside
The marks of good practice are not hard to spot, and none of them require any knowledge of insurance. An adviser will state, in numbers, what they are paid if a recommendation proceeds and what they are paid if nothing changes. A review arrives without having to be asked for. And any recommendation to replace comes with a written comparison of what the existing policy covers and the new one will not, including anything added to the medical history since the original was issued, offered before anything is signed rather than after.
These are not private standards. The FMA publishes its own list of what you are entitled to expect from a licensed adviser, and being told when that adviser is paid by someone other than you is on it.
Once a year, and when something changes
Every client’s cover is reviewed annually, and again on a trigger event: a birth, a sale, new debt, a change in income, a marriage ending. Appointments are face to face by default. The client base is naturally limited, which is what makes an annual review a schedule rather than an aspiration.
Advice covers life, trauma and critical illness, TPD, income protection, mortgage and redundancy cover, and health and medical insurance. It does not extend to investments, KiwiSaver, lending, or fire and general. Fees may apply, agreed in writing before any work begins, and commission may also be received; both are set out in the disclosure statement provided at the first meeting. The only thing signed at that meeting is confirmation that it has been received and understood.
The practical point
If you hold cover and nobody has been in touch about it for several years, that is worth a call, whether to whoever arranged it or to someone else.
If a policy you already hold is recommended for replacement, ask for the comparison in writing, and read the exclusions before the premium.
If you moved a policy at some point and never went back to check, the thing to look at is the list of exclusions on your current schedule, set against anything that has happened to your health since the original cover began. That is something you can do yourself, with the policy document in front of you.
And a review that concludes nothing should change is a completed review, not a wasted one.
Arrange a time to talk. We meet in person, in Hamilton or wherever suits you.
Sources: Financial Markets Authority, Financial Conduct Report 2026/27, published 30 June 2026. Samantha Barrass, keynote address to the Financial Advice New Zealand Policy Summit, 28 July 2026. Financial Markets Authority, Access to financial advice in New Zealand: challenges and opportunities for the financial advice sector, March 2026. Financial Markets Authority, Replacing life insurance — who benefits?, June 2016. The Financial Conduct Report’s financial advice priorities were surfaced by Insurance Business New Zealand, 11 August 2026.