This year, following the global trend, New Zealand’s insurance landscape has moved from a hard market across many commercial lines, to a softening in key sectors including cyber and directors and officers (D&O). Industry sources have told Insurance Business that 2024 has seen a significant increase in Lloyd’s market commitment to New Zealand risks.
As 2024 comes to an end, IB is approaching insurance leaders for their view of this year’s challenges and what could lie ahead in 2025.
Paula Sheppard-Jones (pictured above) is general manager of the underwriting agency DUAL NZ. She said the biggest insurance challenge of the year came from the speed with which the economy, and then as a result, the insurance market, changed around the middle of the year.
“We went from a market where property rates had been driven to a level where affordability was becoming an issue for many insureds, to now, where we are seeing a lot of capacity coming into NZ and bringing the market pricing down to almost unsustainable levels,” said Sheppard-Jones.
She said this “usually short-term capacity” makes it “incredibly difficult” to keep pricing affordable and sustainable.
One memorable event of 2024 for Sheppard-Jones, she said, was her firm receiving the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) award for Underwriting Agency of the Year.
“To be acknowledged for the work we are doing to provide service solutions to our broker partners and our dedication to giving back to our communities is incredibly humbling,” said Sheppard-Jones.
She sees the biggest challenge ahead as maintaining balance in the market.
“This will be a turbulent year for our industry with challenges presented as capacity moves in and out of the territory, coupled with a difficult economy where we are experiencing liquidations, insolvencies and job losses, will bring pressures on all aspects of our industry as our customer base constricts,” she said.
The Insurance Brokers Association of New Zealand (IBANZ) is also gathering industry views on 2024’s challenges.
“With the hard market due to high inflation and the events in 2023, the market has seen strong growth,” said Neil Cousins, CEO of Steadfast NZ. “With the benign claims period over the past 18 months, it was just a matter of time before the calls from London started to come.”
Cousins said 2025 will see his giant firm continue to invest in new technology. He expected the recent acquisition of a London-based Lloyd’s brokerage to support overseas insurance placements and make it easier to access London syndicates.
However, like Sheppard-Jones, he suggested that the moves towards a soft market will bring challenges.
“With calls coming in from the London market, it was only a matter of time before capacity increased and prices started to fall,” said Cousins. “This appears to be prominent in the corporate market but will gradually drift into mid and SME markets. Does this worry me? For sure.”
He said the pricing increases after “the large event in 2023” were too strong and so adjustment was needed.
“But to move to a soft market will only cause disruption when the next event or series of events come around,” said Cousins.
The Steadfast CEO also told IBANZ that he expects the domestic market to continue rising because of the lack of competition.
The update by the brokerage and risk management firm also reported a trend towards a softer commercial insurance market, following an extended period of premium growth.
The authors found that premium hikes are tapering off, reflecting a slower rate of increase compared to earlier in the year.
Rothbury Insurance Brokers also published an insurance market update last month. The update included a video interview with Paul Munton, the firm’s Auckland-based executive general manager of broking branches.
Rothbury is one of New Zealand’s bigger brokerages with about 500 staff in offices across the country. The update was positive about the year ahead.
“As the market enters a softer phase, there is an increase in insurance availability, making it easier for businesses to find the insurance cover they need,” said the report.
Are you an insurance professional? How would you summarise your 2024? How does the year ahead look? Please tell us below
