Credit ratings agency AM Best has maintained a stable outlook for New Zealand’s non-life insurance industry, citing stronger economic conditions, rising insurance demand, increased reinsurance capacity and continued improvements in regulation.
These factors have strengthened market discipline, but operational challenges, cost pressures from regulatory changes and ongoing climate risk concerns remain severe.
Non-life insurance premium growth in the country is expected to remain resilient. Ding Yi, deputy director of AM Best, said: “The increased demand for insurance protection is also expected to drive premium growth due to increased risk awareness and risk exposure, especially natural disasters and cyber risks.”
Legislative and regulatory reforms such as the Insurance Contracts Act 2024 are prompting insurance companies to aggressively pursue product simplification. For non-life insurers, these often include clearer policy wording, greater coverage and pricing flexibility, digital distribution and fairer claims outcomes. These efforts are expected to enhance consumer experience, thereby boosting premium growth.
AM Best explained that while New Zealand households continue to face cost of living pressures, high household debt and weak real wage growth due to the recent economic slowdown, the economy is expected to recover as monetary policy shifts to easing.
New Zealand’s non-life insurance sector remains heavily reliant on the international reinsurance market, as the country’s market is relatively small and vulnerable to natural disasters.
Non-life insurers will benefit from an improving global reinsurance profile through 2025, characterized by increased capacity and moderate pricing, particularly in non-loss affected lines, a trend expected to continue according to AM Best forecasts.
The report stated that New Zealand has not experienced major natural disaster events in recent years, further supporting the stability of reinsurance pricing.
AM Best said: “While regulatory reforms have strengthened market discipline and provided greater protection for consumers, they have also increased operational complexity and costs for insurers. Insurers often need to make significant investments in system upgrades and data infrastructure projects to ensure fair and transparent customer outcomes and address legacy conduct issues.”
“These investments continue to impact short-term profitability, and any significant benefits are expected to be realized over the longer term,” Ding concluded.
