In its offering sent to the market this week, Sovereign will apply a basic initial commission rate of 230% across its TotalCareMax life rate for age policies.

Other Sovereign products including its level premium, compulsory group, TPD, trauma and health policies would not be subject to the new commission rate, a company flyer says.

The increase, which is understood to add about 20% above its previous maximum rates, will be available to all advisers but it is unclear whether Sovereign will pay volume overrides to advisory groups.

However, advisers in Sovereign's tied advisory group, SovNet will continue to receive a "loyalty bonus", expected to add a further 10% commission on top of the basic rate.

It is understood approximately 500 risk advisers sit under the SovNet banner.

Sovereign's move has puzzled some market participants given New Zealand's already high, by world standards, insurance commission rates were expected to come under pressure, particularly with new tax rules for life policies due to come into force next year.

Barry Read, Newpark Financial Services general manager, said Sovereign was the third insurer to increase commissions recently.

"We were surprised [at the Sovereign increase] in light of the pending tax changes which insurers have been saying would increase premiums," Read said.

David Haak, Sovereign head of adviser distribution, was unavailable for comment.