The New Zealand insurance sector is undergoing a period of transition, with recent analysis from Rothbury Insurance Brokers indicating that the market is moving away from the pronounced premium hikes seen in
previous years.
This development, described within the industry as entering a “soft phase”, is associated with more moderate pricing, increased flexibility from insurers, and broader policy options for clients.
While the pace and extent of these changes differ by provider and region, the general trend points to a flattening of premium rates, and in some cases, reductions, particularly benefiting homeowners who have previously experienced significant increases.
The move toward steadier market conditions is attributed to several converging factors. These include a sustained period of lower claims, improved financial outcomes for insurers, and revised risk pricing strategies among global reinsurers. However, the report notes that this stability does not mean uniformity across the board. Ongoing challenges such as rising repair costs and changing weather-related risks continue to influence how insurers assess and price individual properties.
Premium trends and regulatory impacts
Jimmy Higgins, chief executive at Suncorp New Zealand, commented on the current environment. “The market has stabilised, and future premium rises are likely to track more closely with general inflation, rather than the steep surges seen in recent years,” he said.
The motor insurance segment is also experiencing a moderation in pricing, attributed to fewer claims and improvements in supply chain operations.
Insurers are increasingly using individual risk factors – such as driving history, vehicle type, and location – to determine premiums, rather than applying uniform increases.
It is important to note that government-imposed levies remain a significant component of overall insurance costs.
The upcoming adjustment to the Fire and Emergency New Zealand (FENZ) levy, expected in 2026, may counteract some of the benefits from the current softening in premium rates, as these charges are added on top of the insurance premium.
Insurer capacity and risk appetite
The report highlights an increase in the availability of home insurance across the country, as insurers recover from the financial effects of major weather events in 2023, including Cyclone Gabrielle and the North Island floods.
The cost of reinsurance has stabilised following earlier spikes, and insurers such as IAG and Suncorp have reported improved financial performance, drawing additional investment and fostering greater competition in the market.
Nevertheless, insurers remain cautious in areas assessed as high risk, such as earthquake-prone parts of Wellington and flood-prone regions like South Dunedin.
In these locations, policies may exclude certain perils or require higher excesses, reflecting a broader industry trend toward pricing based on the specific risk profile of each property.
Ongoing and emerging risks
Despite the overall market stabilisation, a range of evolving risks continues to shape insurance offerings and pricing.
The frequency of extreme weather events – such as floods, storms, and tornadoes – has increased, prompting insurers to reassess risk, particularly in vulnerable regions. As a result, some policyholders may encounter higher premiums or exclusions for certain hazards, even as the broader market softens.
Technological developments in vehicles, including the integration of advanced sensors and driver-assistance systems, are making repairs more complex and costly.
While supply chain issues have eased, elevated prices for building materials and ongoing labour shortages continue to influence insurance costs and policy excesses.
Recommendations for insurance professionals and clients
Rothbury Insurance Brokers advises regular policy reviews to ensure coverage remains aligned with current risks and property values.
Homeowners are encouraged to verify that their sum insured reflects up-to-date rebuild costs, review policy exclusions – especially those related to natural disasters – and stay informed about changes in local zoning or flood mapping. Steps to improve property resilience, such as installing flood barriers or maintaining roofing, may also support continued insurance eligibility.
For commercial clients, the current market presents opportunities to revisit coverage, negotiate terms, and potentially achieve cost savings. However, businesses with higher claims or weaker risk management may not experience the same benefits.
Rothbury recommends that companies work closely with their brokers to evaluate coverage options, balance cost savings with adequate protection, and address emerging risks such as cyber threats, artificial intelligence exposures, and climate-related events.
Regularly updating insured values and reviewing excess levels are also advised to maintain effective protection in a changing environment.
