In a note to advisers, acting chief executive Adrian Riminton said the insurer had been conducting a review of the business, including the adviser proposition and commissions.

"We've concluded that paying initial commission on CPI increases is out of step with changing expectations around good customers outcomes and we're the only insurer that pays it."

The change would take effect in six months' time.

If a clients' premiums were $1,000 and increased to $1,030 because of inflation, most insurers would pay renewal commission on the total new amount.

But Fidelity Life would have paid renewal commission on the initial $1,000 plus about 180% initial commission on the $30 increase. Initial commission was not paid on rate-for-age increases.

Inflation has been low in recent years – the Reserve Bank says it is currently at 1.5%.

Riminton said advisers' renewal commission would continue to increase based on CPI-adjusted premiums. As it does already.

"We acknowledge this change may have a financial impact on some advisers. That's why we are providing six months' notice to allow you as much time to adjust as possible."

Riminton said the insurer had also found that, since 2015, it had been paying initial commission on CPI increases for some former Tower policies that were not eligible for the payment.

"While we won't be looking to recoup this, we do need to correct our mistake. So from November 2020, we'll no longer pay you initial commission on CPI increases on these policies."

He said Fidelity Life would reveal more changes to its adviser proposition in the coming months.

"We'd like to emphasise we're well-capitalised and in good financial shape. These changes are part of our business-wide transformation, which includes our refreshed brand, a complete new technology platform and our move next year to a brand-new CBD building. Our goal is to prioritise our investment in those areas that will have a lasting benefit to customers."