People who buy insurance through their bank or broker are much less likely to be a satisfied customer, research from Consumer New Zealand has revealed.

Just 47 per cent who bought house insurance from a bank and 51 per cent who bought from a broker thought they were getting good service.

READ MORE:
Premium - Are you covered? What insurance do you need and what you don't
Premium - How to avoid house, car and contents insurance mistakes
Are you covered? All you need to know about health insurance
Insurance market not working for consumers says watchdog
Diana Clement: How to get best car insurance deals

In comparison, 57 per cent who bought direct from the insurer were happy with the service they received, an annual survey by the Consumer advocacy group found.

Advertisement

The difference in satisfaction was even larger with life insurance.

Only 28 per cent buying life insurance from a bank and 32 per cent buying from a broker rated the service they received highly.

That compared with 47 per cent who bought their cover direct from the insurer.

Sue Chetwin, Consumer New Zealand chief executive, said that while customer satisfaction across the insurance industry wasn't high the survey showed banks and brokers were performing the worst.

Chetwin said sales incentives and commissions paid to bank staff and insurance brokers were likely to be a major factor behind the difference.

Last year, the Financial Markets Authority and Reserve Bank published reviews of the insurance industry, criticising companies for failing to recognise the huge conflicts of interest created by commission-based selling.

"In the life insurance industry, brokers' commissions can be as high as 200 per cent of the customer's premium. A broker chasing another commission to boost their income is going to do what's best for them, not what's best for the consumer," she said.

The survey of 5266 Consumer New Zealand members found people were most satisfied with their car insurance at 65 per cent, followed by travel insurance at 59 per cent.

Advertisement

They were least satisfied with their life insurance at 36 per cent.

Chetwin said consumers should regularly review their insurance and shop around if they weren't getting good service.

Getting the best out of your insurance
• When you get your annual renewal notice, check if you could save by switching companies.
• Get at least three quotes. Premiums can differ by hundreds of dollars.
If you're unsure about what a policy covers and the exclusions, get the company to explain it to you in writing.
• Regularly review how much cover you need, especially after major events such as marriage or divorce, having children, or children leaving home and becoming independent.
• If you're changing insurers, don't cancel your old cover until you're confirmed as a customer of your new insurer on terms you're comfortable with.
source: Consumer New Zealand