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Consumers are paying more than ever for insurance but they're not getting a fair deal, according a consumer watchdog.
Consumer NZ chief executive Sue Chetwin said its latest report involving survey research found significant problems in the insurance market, including a high level of complaints and low levels of trust.
"Just 13 per cent of consumers were confident they could trust insurers to give them good advice," she said.
"Many were unsure about the cover provided by their insurance policy and what they were getting for their money.
"Only 18 per cent felt they fully understood the terms of their policies."
The survey also found one in four had experienced a problem with their insurer, she said.
The top complaint according to the report was having a claim unreasonably declined.
Chetwin said insurers had wide-ranging rights to decline a claim if they decided a customer had not told them something they considered material, regardless of whether the customer knew they needed to disclose this information.
"In other countries, consumer protection laws prevent insurers from unreasonably refusing a claim in cases of innocent or accidental non-disclosure," she said.
"But that's yet to happen here, which means Kiwis are more likely to have claims declined."
Consumer NZ's research also found those who bought cover through an insurance adviser or broker were more likely to feel they were getting a bad deal.
They were significantly less likely to be satisfied with the service they got compared with those who bought direct from an insurance company.
Chetwin said this difference was most evident among consumers who'd bought life insurance.
Just 28 per cent of those who got their life insurance from a broker were happy with the service provided, compared with 44 per cent who bought direct from an insurance company.
"Life insurance brokers get paid on commission, which can be as high as 200 per cent of the premium.
"Commission-based selling comes with a huge risk the broker will put their earnings ahead of what's right for their customer.
"The results of our research suggest selling insurance this way is leading to poorer outcomes for consumers."
Consumer NZ is campaigning for changes to insurance law to improve protection for consumers.
Proposals to change the law have been released by the Ministry of Business, Innovation and Employment. The deadline for public submissions on the proposals is June 28.
Chetwin encouraged consumers to have their say.
"If you want to get involved, we've put up a template submission on consumer.org.nz to help you."