Credit ratings agency AM Best is maintaining a stable outlook on New Zealand’s non-life insurance sector, citing stronger economic conditions, rising insurance demand, enhanced reinsurance capacity, and ongoing regulatory improvements.
These factors have reinforced market discipline, yet operational challenges, cost pressures from regulatory changes, and persistent climate risk concerns remain significant.
The country’s non-life premium growth is expected to remain resilient. Yi Ding, Associate Director, AM Best, said, “Premium growth is also expected to be driven by higher demand for insurance protection owing to increased risk awareness and exposures, particularly for natural catastrophe and cyber risks.”
Legislative and regulatory reforms, such as the Contracts of Insurance Act 2024, are prompting insurers to actively pursue product simplification. For non-life insurers, these typically include clearer policy wording, increased flexibility in coverage and pricing, digital distribution, and fairer claims outcomes. These efforts are expected to enhance consumer experience, thereby promoting premium growth.
Whilst New Zealand households continue to face cost-of-living pressures, high household debt, and weak real wage growth due to the economic slowdown in recent periods, the economy is expected to recover as monetary policy shifts towards easing, explained AM Best.
New Zealand’s non-life insurance segment remains heavily dependent on the international reinsurance market, due to the country’s relatively small market being highly exposed to natural perils.
In 2025, non-life insurers benefited from improved global reinsurance conditions, characterised by greater capacity and moderating pricing, particularly across non-loss affected lines, a trend which is expected to continue according to AM Best.
According to the report, the absence of major natural catastrophe events in New Zealand in recent years has further supported stability in reinsurance pricing.
AM Best said, “Whilst regulatory reforms strengthen market discipline and provide more safeguards for consumers, they also increase operational complexity and cost for insurers. Insurers are often required to make significant investments in system upgrades and data infrastructure projects to ensure fair and transparent customer outcomes and address legacy conduct issues.”
Ding concluded, “These investments continue to weigh on short-term profitability, with any significant benefits expected to materialise over a longer time horizon.”
