FMA warns insurers over incentives

The Financial Markets Authority is warning insurers about short-duration campaigns and other incentives.

Monday, June 15th 2026, 3:11PM

In a paper, Insurers benefits and campaign insights, it reheats the soft commissions issue, but this time with a Conduct of Financial Institutions (CoFI) lens on it.

The regulator warns non-monetary benefits and short-duration sales campaigns may result in poor customer outcomes.

It defines “non-monetary” benefits as gifts, prizes, trips, tickets to sporting events and professional development such as training, events and conferences.”

Short-duration sales campaigns are “initiatives conducted over a limited period of time to incentivise employees, agents and/or intermediaries to encourage consumers to consider, commit to, or to purchase product or service.”

“We believe non-monetary benefits, and short duration sales campaigns provided by insurers continue to exacerbate the risk of poor customer outcomes,” FMA Executive Director – Regulatory Delivery, Clare Bolingford says in a letter to insurance company bosses.

“When insurers encourage advisers to sell their products it must not be to the detriment of the customer.”

“Such inducements increase the risk consumers will be sold a product or service that does not meet their needs, unnecessary payment of additional premium, or having a poor claims experience because their interests have not been prioritised.”

The FMA asked companies whether they offer non-monetary benefits, and short duration sales campaigns to your employees, agents and/or intermediaries. Further it went on to ask companies to provide assurances that the incentives comply with CoFI incentive regulations.

It also wanted to know that the policies, processes, systems and controls in Fair conduct programmes (FCP) are “operating effectively to ensure consumers are treated fairly when these incentives are offered.”

In response to its enquiry last year the FMA said “most insurers had some level of oversight of their benefits and campaigns through monitoring and reviews, this varied across insurers.

Some insurers completed a review at the end of a benefit or campaign period, while some conducted monitoring throughout.
Some did not appear to have considered intermediary incentives when reviewing distribution methods against the fair conduct principle.
Levels of involvement by intermediaries and distribution partners differed. In some cases feedback from advisers or external partners was actively sought, and in other cases reviews were managed internally.
Some insurers incorporated a mix of quantitative and qualitative data in their review process, while others relied on complaints or ad hoc feedback.

“We encourage insurers to take a proactive and outcomes-focused approach to overseeing the operation of benefits and campaigns.”

The FMA is warning insurers that it will “actively test” systems through its supervisory and monitoring activities.

“Where we identify weaknesses, we will expect insurers to address them promptly, including by changing or stopping benefits and campaigns that are inconsistent with the fair conduct principle or that expose consumers to unfair outcomes.”

The FMA warned it may take regulatory action.

“Depending on the nature and seriousness of the breach, our response may include direction orders, such as requiring the insurer to undertake remedial actions or directing improvements to governance or conduct controls. It may also include adding or varying licence conditions, or pursuing civil action.”

Tags: CoFI FMA