Insurers spent $NZ34 million ($31.2 million) on New Zealand advisers through so-called soft commissions over a two-year period to March last year.

Almost half of these non-financial incentives such as trips and sponsorships required the adviser to sell a particular dollar value or number of the insurer’s products, according to a Financial Markets Authority (FMA) report.

“We are concerned that insurers are designing incentives that potentially set advisers up to fail in complying
with their obligations,” the regulator says.

“Advisers are incentivised to sell the insurer’s product, and they need to balance this against achieving the best outcome for the customer, which is potentially conflicted conduct.”

The report is based on data from nine major insurers: AIA, Asteron Life, AMP, Fidelity Life, Nib NZ, OnePath, Partners Life, Southern Cross and Sovereign.

Insurers spent $NZ18 million ($16.5 million) sending advisers on domestic and overseas trips – the most popular form of soft commission.

Foreign destinations included Argentina, the UK, the US and Japan.

Professional development, gift vouchers and Christmas gifts are other forms of soft commission, which are provided in addition to upfront fees.