New Zealand's general insurance sector is poised for significant expansion, with projections indicating a rise from $9.7 billion in 2024 to $12.9 billion by 2028, reflecting a 7.3% compound annual growth rate (CAGR) in gross written premiums (GWP), according to data and analytics company GlobalData.
A considerable portion of this growth is expected to stem from the property and motor insurance segments, which, combined, accounted for approximately 75% of the industry's total GWP in the previous year.
Looking ahead to 2024, the industry is forecasted to experience an 8.3% increase, buoyed by the strong performance of property and motor insurance sectors.
GlobalData's analysis suggests a robust growth trajectory for the industry, with a forecasted 10.1% increase in 2023 following a 10.9% rise in 2022.
“The growth is supported by a rise in the demand for natural catastrophic (nat-cat) insurance policies due to an increase in the frequency of extreme weather events and an increase in premium prices across most of the insurance lines driven by inflation,” said Sneha Verma, insurance analyst at GlobalData.
Dominating the industry's growth, property insurance claimed a 41.7% share of the general insurance GWP in 2023, experiencing a 9.8% rise driven by escalating demand for coverage against natural disasters.
“Increasing claims from weather events have prompted reinsurers to increase reinsurance rates. This will further increase the premium rates of home and agriculture insurance policies and support property insurance growth,” Verma said.
With inflation rates hitting 4.7% in 2023, surpassing the Reserve Bank of New Zealand's target range of 1% to 3%, the cost of property insurance has been significantly impacted, with predictions indicating a 7.9% CAGR in this segment from 2024 to 2028.
Motor insurance, representing a 32.9% share of the industry's GWP in 2023, saw a 9.4% growth, mainly due to inflation-led premium hikes and substantial claim disbursements following Cyclone Gabrielle.
The sector witnessed a significant surge in car insurance costs in 2023, with a 30% average increase in annual premiums, indicating a continuing upward trend into 2024.
The motor insurance sector is expected to achieve a 6.3% CAGR through to 2028.
Liability insurance, holding a 9% slice of the general insurance GWP in 2023, is on a growth path, with a 7% increase forecasted for 2024 and a 6.5% rise in 2025.
This segment's growth is bolstered by compulsory insurance requirements such as professional indemnity and a rise in cyber-attack incidents, with the New Zealand Cyber Security Centre noting a 20% increase in cyber incidents in 2023 over the previous year. Liability insurance is projected to expand at a 7.8% CAGR from 2024 to 2028.
The remainder of the general insurance GWP in 2023, comprising 16.4%, was attributed to marine, aviation, and transit (MAT), along with other general insurance lines.
The New Zealand general insurance market's expansion over the next five years is expected to be supported by the economic recovery following the pandemic and increasing premium rates, despite potential volatility in profitability due to high claims from frequent natural disasters and rising reinsurance rates.
