Gallagher New Zealand’s latest market update signals a trend toward a softer commercial insurance market, following an extended period of premium growth.
The report, released this month, indicated that premium hikes are tapering off, reflecting a slower rate of increase compared to earlier in the year.
Both companies reported robust financial results as of mid-2024, primarily driven by rising premium rates and fewer large-scale claims over the past 18 months. Reinsurance costs have also steadied, providing additional support for these financial results.
This softening trend in New Zealand’s insurance market aligns with broader international patterns, where global markets are experiencing a slowdown in premium increases despite frequent costly climate-related events.
Gallagher’s report noted that although costs from catastrophic events remain high, premiums have levelled off in recent months. While data for 2024 catastrophic event costs remain incomplete, Hurricane Milton’s anticipated impact may drive up global losses.
Increasing climate-related claims in North America have prompted insurers and reinsurers to diversify their portfolios, opening more interest in the New Zealand market.
Lloyd’s of London and other reinsurers are actively pursuing additional underwriting opportunities in New Zealand, increasing competition within the commercial sector, especially for larger corporate clients.
Gallagher New Zealand’s report highlighted that while increased competition could benefit policyholders in some cases, there are still notable uncertainties, including the ongoing impact of extreme weather events and geopolitical risks.
Insurance inflation in New Zealand stood at 12.9% year-on-year as of September 2024, substantially higher than the national inflation rate of 2.2%, according to Stats NZ data. However, September data also showed a slight decline in the insurance inflation rate – the first since late 2023.
For insurers, the move toward lower pricing may not apply across all policies. Insurers are beginning to adjust premiums with greater scrutiny on individual risks and claims histories. Lower-risk clients with strong claims records may see more favourable pricing adjustments, while others may face different terms.
In a separate report, Gallagher Re recently released its 2024 Asia Pacific Market Watch, examining insurance industry dynamics across 14 markets in the region.
The report identified various factors, including regulatory developments, economic growth, and digital innovation, as critical drivers influencing the sector’s stability and resilience.
The Asia-Pacific market remains poised for growth, with emerging demand in accident and health, cyber, and electric vehicle (EV) insurance segments.
Economic recovery across the region has increased the need for new risk solutions, positioning Asia-Pacific as an essential contributor to the global insurance industry’s growth trajectory.
Digital and technological advancements continue to boost the insurance sector, with accident and health, cyber, and EV motor insurance segments gaining particular traction. Notably, cyber insurance demand has surged across markets such as Malaysia, Singapore, Australia, and New Zealand as cyber threats intensify.
