New Zealand insurers have been operating under significantly enhanced regulatory requirements aimed at protecting consumers and promoting fairness throughout the insurance lifecycle since March 31, 2025. Central to these reforms is the Conduct of Financial Institutions (CoFI) regime, which greatly expands the Financial Markets Authority’s (FMA) oversight role and imposes new licensing and conduct obligations on insurers and related financial institutions.
The CoFI regime mandates that all insurers providing consumer insurance must obtain a financial institution licence from the FMA. This licensing process ensures that only firms with robust governance, financial strength, and compliance capabilities participate in the market. Insurers seeking licensing must establish and maintain a Fair Conduct Programme (FCP) that clearly outlines how the institution intends to meet its obligations to treat customers fairly.
Fair conduct encompasses several key principles, including the requirement that consumers receive appropriate products and services that meet their needs at all stages of life, transparent communication, and timely, fair claims handling. This principle transforms the insurer-customer relationship by emphasizing fairness as a continuous operational ethos, rather than a static compliance checkpoint.
Institutions must publicly disclose summarized details of their FCP on their websites in an accessible format, enhancing transparency and enabling consumers to assess the fairness commitment of their insurer. This public accountability mechanism generates pressure on providers to maintain high standards of conduct and enables consumer trust.
The FCP requirements are not uniform but scaled to the nature, size, and risk profile of the institution. Smaller insurers receive tailored guidance to develop FCPs appropriate to their operational contexts, while larger firms face more comprehensive demands. All programmes must be formally approved and overseen by the insurer’s governing body, ensuring alignment between strategy and fair conduct commitments.
The FMA has increasingly exercised its enforcement powers under CoFI, including imposing fines and undertaking compliance assessments. This demonstrates the regulator’s commitment to not only setting fair conduct standards but actively monitoring and enforcing them, deterring harmful practices and driving ongoing cultural improvements in the sector.
These regulatory shifts necessitate profound operational changes within insurers. Institutions are overhauling sales practices to eliminate unfair incentives, enhancing training programs for frontline staff, and investing in technology to improve transparency and customer communications. Claims handling processes have been scrutinized and enhanced to ensure fair, timely resolution of customer grievances.
Beyond compliance, many insurers view the regime as an opportunity to embed fairness into their corporate cultures proactively, driving innovation and customer loyalty. Those embracing the new regulations as a competitive differentiator stand to benefit as informed consumers increasingly prioritize transparency and ethical behaviour in choosing insurance providers.
Fintrade notes that the CoFI regime represents a landmark enhancement in New Zealand’s insurance governance and customer protection framework. Clear conduct expectations and proactive regulatory oversight help cultivate a trustworthy market environment, essential to sustaining consumer confidence and long-term sector growth. The financial advisory firm encourages insurers to continue engaging constructively with regulators and customers to embed the spirit as well as the letter of these reforms.
The modernization of insurance conduct regulations through the CoFI regime reflects a forward-thinking approach to balancing industry vitality with consumer rights. By fostering licensing rigour, fair conduct commitment, and active supervision, New Zealand strengthens its insurance market’s integrity and responsiveness to customer needs in an evolving risk landscape.