Air New Zealand has been issued with a formal warning by the Commerce Commission and will stop pre-selecting travel insurance for passengers buying tickets online.
The regulator is calling on all of the country's businesses to end the use of "opt-out pricing" and is concerned companies could be misleading customers into purchasing something they didn't want.
After hearing the regulator's views, Air New Zealand has written to the commission to say it will move to an opt-in basis for selling travel insurance from April.
Although the commission issued a formal warning to the airline, no further action will be taken.
"We are pleased that Air New Zealand decided to respond to our concerns and will ensure consumers aren't unintentionally paying for products they may not want or need in the future," said commission chairman Mark Berry.
"We will be targeting other companies we are concerned about. We would encourage all businesses selling online to proactively change their behaviour or drop any consideration of introducing this practice. We believe Air New Zealand made the right decision and other businesses should follow their example," he said.
Mr Berry said using an opt-in approach avoids any possible breach of the Fair Trading Act.
"Consumers are perfectly capable of deciding for themselves whether they want to pay for additional products or services. If a company is concerned that its customers need insurance then a suitable approach is to require them to tick 'yes' or 'no' in a mandatory field and leave it in their hands", he said.
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