New Zealand home premiums have risen at three times the pace of the consumer price index since 2011 and by more than 40% in the past two years, with properties subject to flooding and seismic risks drawing significantly higher increases, a Treasury report says.

Factors include rising construction and reinsurance costs, catastrophe losses, insurer reassessments and risk-based pricing, while competition issues may also be a contributor.

The report says pricing is “inherently complex” and publicly available information about market dynamics and the financial performance of insurance providers is limited.

“It is therefore not currently possible to robustly assess the extent to which premiums accurately reflect underlying risks, or whether there are cost-effective policy changes that could meaningfully improve affordability outcomes,” it says.

The heavily redacted report – titled Insurance Affordability Future Work Options – has been released under the Official Information Act. It is dated last October.

Treasury says that while data is limited, preliminary work suggests competition issues may exist.

New Zealand’s residential insurance market is highly concentrated and has become more so since the Canterbury earthquakes, while profit margins are potentially higher than in Australia.

“The reasons for this are unclear. New Zealand’s higher risk profile is a contributing factor, with investors demanding higher returns for the higher risk. However, it could also indicate weaker competitive pressures.”

Insurance remains largely available, but access is becoming more difficult in areas facing both high earthquake and flood risk, such as Wellington, Marlborough and Canterbury.

A mostly redacted section on existing work streams that may support affordability outlines Environment Ministry activity related to climate risks.

The work includes a new national direction to ensure councils more consistently avoid approving developments where risks are too high to cost-effectively manage them, and a proposed national flood map for property owners, investors, insurers and councils.

Insurers have stated solvency prudential requirements may be contributing to high premiums, but the report notes some providers hold more capital than required.

The report also refers to a review of financial and levy settings under the NHI Act, which governs the Natural Hazards Commission.

“We informed insurers on October 1 2025 that while final review decisions have not yet been made, no changes to the levy or cap will be made until at least mid 2027,” it says.