Labour has pledged to ban insurance loyalty pricing in New Zealand, proposing that insurers be prohibited from charging longstanding policyholders more than new customers for comparable cover.
The policy, announced on November 2, 2026, ahead of the November 7 general election, would also bar companies from moving customers onto plans that are “unjustifiably” more expensive once an introductory deal ends. It applies to phone and internet providers as well as insurers.
Party leader Chris Hipkins said the renewal pricing gap penalises customers who stay with their provider. “Too often, people who stay with the same phone, internet or insurance company for years end up paying more than a new customer. Many find their bills go up when a deal ends, or that a sale wasn’t the bargain it looked like,” Hipkins said.
Read more: Insurance rewards for new policies raise loyalty pricing questions
The proposal would eliminate the gap between new-business and renewal pricing that currently gives brokers a commercial reason to move clients between providers. If renewal prices cannot exceed what a new customer would pay, the switching incentive narrows and broker value shifts further toward service, claims advocacy, and risk advice rather than price negotiation.
Data from insurance comparison platform Quashed, published in April 2026, showed the pricing gap already falls unevenly across age groups. New Zealanders aged 61 and over saw average general insurance costs rise 35% over three years to $5,106, while premiums for those aged 25 to 30 fell 1% year on year.
Justin Lim, chief executive of Quashed, said older policyholders “are typically with insurers for a much longer time” and “are paying a loyalty tax for sticking with their provider.”
A survey by the Insurance Council of New Zealand (ICNZ) released in April 2025 found 20% of policyholders had switched providers in the previous two years. About 21% said they routinely compared options at renewal, but 25% never shopped around.
Glenn Marshall, a New Zealand broker who raised loyalty pricing concerns with the Financial Markets Authority (FMA) earlier in 2026, said “promotions that reward churn, and effectively penalise loyalty, shift costs on to renewing customers.”
Rebecca Styles, Consumer NZ’s insurance spokesperson, said the pattern amounts to a loyalty tax. “We find in our surveying that most people set and forget insurance,” Styles said.
Read more: Government kicks insurance affordability down the road until after the election
The loyalty pricing ban is one part of a broader consumer package Labour announced during the campaign. The party would also ban what it calls “junk insurance” sold alongside car purchases, including paint protection and navigation insurance, and mechanical breakdown cover that excludes most breakdowns, according to a 1News report from October 1, 2026.
Car dealers would be prohibited from taking undisclosed commissions on insurance products, and sellers would need to show the total cost over the life of a finance or insurance agreement before a customer signs.
Arena Williams, Labour’s commerce and consumer affairs spokesperson, said the Consumer Price Index (CPI) is not keeping pace with real household costs. “Labour has a plan to tackle the cost of living and make sure Kiwis get a fair go on their household bills,” Williams said.
Advertised discounts would need to be based on the lowest price charged for a product in the previous 30 days.
A Cabinet paper released earlier in 2026 found home insurance premiums had grown at three times the rate of CPI since 2011, including a 40% increase over two years.
The current National-led government deferred a decision on whether the Crown should intervene on insurance affordability until after the election. Finance Minister Nicola Willis and Commerce and Consumer Affairs Minister Scott Simpson directed the Council of Financial Regulators (CoFR) to continue gathering information.
Ireland banned insurance loyalty pricing from July 2022. The Central Bank of Ireland’s review found the regulations were “working effectively” and that consumers on their second or later renewal no longer paid a loyalty penalty.
Labour is the only party to target insurance pricing specifically. The Green Party has proposed a publicly owned electricity retailer. New Zealand First wants to split major electricity generators that also retail power. Neither has announced insurance-specific consumer protections.
The Commerce Commission was also considering a market assessment of the residential insurance sector that could lead to a full market study.
