A review of residential insurance pricing and affordability will be delivered to the New Zealand government by the middle of this year.

The Cabinet Economic Policy Committee has asked the Council of Financial Regulators to hold the review, identifying data gaps and examining pricing drivers.

“Further work may be commissioned once the results of this discovery phase are reported,” committee minutes say.

The review, which follows a deterioration in affordability in recent years, will include a Commerce Commission assessment that may lead to a market competition study. 

The regulator council comprises the Commerce Commission, the Financial Markets Authority, the Reserve Bank of New Zealand, Treasury and the Business Innovation and Employment Ministry. 

Other agencies such as the Natural Hazards Commission may contribute and insurers, reinsurers and consumers will be involved. 

The Insurance Council of New Zealand says the review is an opportunity to build a shared understanding of influences on premiums, how they affect affordability and uptake, and what it means for the future. 

“We look forward to working constructively with officials,” a spokesperson said. “Insurance premiums reflect risk and cost. In New Zealand, those costs are shaped by more frequent and severe weather events, rising construction and repair costs, reinsurance pricing, regulatory requirements, and levies and taxes that sit outside insurers’ control. It’s vital the review considers the full range of these drivers.” 

Strengthening resilience, improving land use planning and investing in risk reduction will help protect communities and ease pressure on insurance costs, ICNZ says. 

New Zealand has paused reviewing the Natural Hazards Commission levy while the affordability work is carried out. 

Officials have advised the current rate of NZ16c (14c) per $NZ100 ($85) of cover up to the residential building cap of $NZ300,000 ($256,000) is insufficient to meet long-term costs, with Treasury recommending the levy rate rise to NZ24c (20c). 

The Finance Minister intends to resume the review of levy settings no later than the 2027-28 fiscal year.