New Zealanders are paying more than ever for insurance, but are not getting a fair deal, according to a new report from Consumer NZ.
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The research shows significant problems in the insurance market and the head of research at Consumer NZ, Jessica Wilson, said trust in the industry is low and complaints are high.
"This is an industry which markets itself as providing peace of mind, it'll be with its customers through thick and thin, but what we found is that only 13 percent of consumers actually trust insurers to give them good advice."
Many were unsure about the cover provided by their insurance policy and what they were getting for their money, and one in four people had experienced a problem with their insurer.
The main problem people complained about was having a claim unreasonably declined, which Ms Wilson said was more likely to happen in New Zealand because of outdated insurance laws.
She said insurers here have quite wide-ranging rights to decline claims if they decide a customer has failed to tell them something that the insurer considers material, regardless of whether the customer knew they had to disclose this information.
"In other countries governments have moved to beef up their protection laws and prevent insurers from unreasonably declining claims in these situations."
Ms Wilson said life insurance was the most problematic type of insurance, and people who had bought a life policy through a broker were the least likely to be satisfied both with price and with the policy they got, compared with those who bought direct from an insurance company.
In the life insurance market, commission selling plays a big role which Ms Wilson said presents an inherent conflict of interest.
"The broker may be recommending a product that may be in their best interest because they stand to get quite a handsome commission, rather than what's best for the customer."
Consumer NZ has been campaigning for some time to change the law and make the market work better, saying people need to be able to easily compare policies, prices need to be transparent and the terms need to be fair.
"We don't have a market that's providing these basics at the moment, that's why law change is needed," Ms Wilson said.
The Ministry of Business, Innovation and Employment has released proposals to change the law, submissions close on Friday.
