A consumer watchdog has called for New Zealand's regulators to take a closer look at insurance products sold via car dealers in the wake of an Australian review which has forced insurers to pay back millions to customers.
However, the bodies which represent insurers and motor vehicle dealers believe there are no problems here.
Jessica Wilson, head of research at Consumer New Zealand, said people who bought cars were regularly offered insurance and warranty products which may provide very little value.
"You can end-up paying for cover you're already entitled to by law."
While other products, such as payment protection insurance, often came with restrictive terms and conditions, which limited the consumer's ability to make a claim, Wilson said.
You can end-up paying for cover you're already entitled to by law.
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"We're concerned these products continue to be sold with misleading information about the cover they offer and we'd like to see regulators take a closer look at this market."
In 2016 the Australian Securities and Investment Commission released three reports covering its review of the sale of add-on insurance through car dealers, which found that the insurance was expensive, of poor value and provided consumers very little or no benefit.
Since then five insurers have said they would pay back more than A$120 million ($131m) to consumers.
The products include insurance for tyre and rim, warranty, loan protection and guaranteed asset protection.
Greig Epps, industry relationship manager at the Motor Trade Association said those sorts of polices were sold in New Zealand via car dealers but the regulatory environment here might mean the problems found in Australia did not exist here.
"Recent revisions to the Consumer Credit Contracts and Finance Act (CCCFA) and changes brought in under the Responsible Lending Code mean that all finance and insurance selling must meet the customer's requirements," Epps said.
"So selling F&I products in NZ in a way that does not meet that requirement will be 'illegal' or 'non-compliant'.
"In light of this regulatory environment, it may be that the problems found in Australia do not exist here or may be more difficult to manifest here on a wide scale."
Epps said the car dealer was often simply an "intermediary" for the insurance company and consumers also needed to take responsibility.
"MTA advises its vehicle trader members to be as clear as possible about these products, there is also a need for customers to have a good understanding of their own current insurance coverage and determine whether they need any further insurance or warranty products."
Tim Grafton, chief executive of the Insurance Council, said: "ICNZ has not been advised by either regulators or its members of the sale of insurance that is not fit for purpose.
"ICNZ requires that its members do not bring the insurance sector into disrepute."
Suncorp, one of the Australian insurers, who will pay back A$17.2m to customers also offers insurance in New Zealand via Vero.
Its New Zealand spokeswoman said Suncorp did not sell similar products through car dealers in New Zealand.
New Zealand regulators have yet to look into the add-on insurance market.
An FMA spokesman said: "We have not been reviewing the practices around car loan insurance and to date have not received any complaints in this area.
"While all insurance services in New Zealand are subject to the fair dealing rules under the Financial Markets Conduct Act, insurers are not licensed by the FMA, which limits our remit."
The spokesman said its initial focus on insurance had been on sales and incentive practices in relation to life insurance, which has longer term consequences for customers and therefore poses a higher-risk.
"We'll continue to consider how we can use our existing powers in relation to general insurance."
A spokesman for the Commerce Commission said it did not have any current investigations into the matters investigated by ASIC.
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