In New Zealand, the general insurance market is dominated by two major players: IAG New Zealand and Suncorp New Zealand. A report from interest.co.nz has prompted a discussion around whether there is enough competition in the insurance market in New Zealand as these companies continue to remain at the top.
Both insurers recently reported significant financial growth, with a combined gross written premium (GWP) of nearly NZD $7 billion for the fiscal year ending in June 2024. IAG, the largest insurer in the country, posted a GWP of NZD $4.12 billion, while Suncorp reported NZD $2.8 billion.
Despite their overwhelming market presence, the leaders of both companies maintain that the market remains competitive.
Amanda Whiting, CEO of IAG New Zealand, highlighted the company’s investments in artificial intelligence and repair hubs as indicators of a dynamic environment. “We’ve invested heavily in our technology … when there are other insurers out there offering different products, we can too,” Whiting told interest.co.nz.
Jimmy Higgins, CEO of Suncorp New Zealand, also argued that the market remains competitive, citing regulatory actions as evidence. He referenced the Commerce Commission’s 2017 decision to block Suncorp’s Vero Insurance from acquiring Tower Insurance due to competition concerns.
Higgins acknowledged the challenges posed by regulatory requirements and market entry barriers, but emphasised the presence of numerous brokers and foreign investments as signs of a healthy competitive landscape.
Suncorp New Zealand saw its GWP grow by 17.3%, reaching NZD $2.8 billion, while IAG New Zealand reported a 15% increase to NZD $4.12 billion. Both companies attributed the rise in premiums to higher reinsurance costs and increased climate-related risks.
Claims payouts were substantial as well, with Suncorp disbursing NZD $1.21 billion and IAG NZ paying out NZD $2.8 billion during the fiscal year.
As Suncorp and IAG continue to dominate the market, questions remain about whether this concentration hinders competition. While Higgins acknowledged the possibility of Suncorp overtaking IAG as the largest insurer, he stressed the importance of financial and social responsibility.
“We need to continually prove social licence operating and that means that when we attract new customers we have to be able to provide a price point that is reasonable,” Higgins said.
The debate over competition in New Zealand’s general insurance market is likely to continue as these two giants maintain their stronghold.
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