New Zealand insurance market set for growth amid climate and economic pressures

Desk report: New Zealand’s insurance sector is expected to expand steadily despite rising climate risks and economic pressures, with property and casualty premiums projected to reach $12.82 billion in 2026 and grow at a 9.12% compound annual growth rate (CAGR) to $19.84 billion by 2031. The growth is driven by rising property values, increasing exposure to natural hazards and expanding digital adoption across the insurance industry.

The country’s life insurance market remains comparatively smaller but stable. Premiums totaled $1.9 billion in 2022, growing at a 4.1% CAGR, supported by rising financial awareness and demand for long-term protection products. Meanwhile, specialty insurance segments such as cyber and climate-related coverage are expanding rapidly as businesses and households face new digital and environmental risks.

New Zealand’s insurance system combines mandatory public schemes and private insurance, resulting in high insurance penetration.

Life insurance offerings include term life policies, which provide coverage for fixed periods and whole life policies, offering permanent protection. Other products include endowment policies, which combine savings with coverage and unit-linked insurance, where benefits are tied to investment performance.

The non-life segment dominates the market, particularly motor and property insurance. Motor insurance generally includes mandatory third-party liability coverage along with optional comprehensive policies covering accidents, theft, and vehicle damage.

Property insurance products such as home and contents insurance protect against risks including fire, theft, water damage, and natural hazards. Specialised policies such as landlord insurance for rental properties and business insurance covering interruption, cyber incidents and liability exposures are also widely used.

Health insurance plays a supplementary role to New Zealand’s public healthcare system, offering faster access to treatments and elective procedures. Travel insurance covers risks including medical emergencies, trip cancellations and lost luggage.

Insurance contracts in New Zealand are governed by the Contracts of Insurance Act 2024, which reinforces the principle of utmost good faith between insurers and policyholders.

Policyholders must provide a fair presentation of risk before entering into a contract, disclosing any material information that could influence the insurer’s decision. Failure to disclose relevant details may lead to reduced claim payouts or policy cancellation.

Common policy exclusions include intentional damage, war-related losses, nuclear risks, undeclared circumstances and gradual deterioration such as wear and tear. Claims must usually be reported within one to three years, depending on policy terms.

Natural hazards remain a major driver of insurance claims in New Zealand. Floods, earthquakes, storms and landslides account for a significant share of property payouts, with climate change increasing the frequency and severity of such events.

Motor insurance claims are the most frequent in the non-life sector, with more than 235,000 claims reported annually, including collisions, parked vehicle damage and windscreen repairs.

Health insurance claims commonly involve cardiac treatments, cancer procedures and spinal conditions, while travel insurance claims often arise from medical emergencies or trip disruptions. Content insurance claims frequently involve personal items such as phones, laptops, jewellery and appliances.

Insurance premiums are calculated based on risk factors including location, property value, age, and claims history. Motor insurance premiums typically range between NZ$ 1,000 and NZ$ 2,000 annually.

Property insurance costs have increased significantly, with dwelling premiums rising by nearly 98% since 2015, partly due to higher reinsurance costs following disasters such as Cyclone Gabrielle, which caused insured losses of around NZ$ 930 million.

Regulated by the Reserve Bank of New Zealand and the Financial Markets Authority, the industry includes major insurers such as IAG, FMG and nib. While challenges remain, including rising reinsurance costs and climate-related risks, opportunities are emerging through AI-driven underwriting, cyber insurance growth and sustainable insurance products.