A “very benign” claims environment means soft market conditions persist in most insurance lines in New Zealand, Gallagher says in a market update.  

Chief broking officer Mark Jones says these conditions emerged more than a year ago and are “now firmly established, with no signs of easing unless a major catastrophic event locally or internationally impacts premiums.

“The current market conditions have led to increased competition among insurance companies, resulting in ample capacity and more competitive premiums for insurance buyers.

“Despite some recent wild spring weather events in New Zealand, the insurance market is still experiencing a very benign claims environment.”

Like other countries, New Zealand has had lower than average claims by both volume and value this year. Gallagher says natural catastrophe insured losses worldwide totalled $US105 billion ($162 billion) in January-September – the lowest sum since 2019.

Global reinsurers are achieving margins around 18%, and these attractive returns are resulting in more investment in the market.  

For insurers in New Zealand, increased reinsurance capacity has driven down prices, reducing a major operating cost and boosting profits even as premiums decline, according to Gallagher.  

“This is generally reflected across the entire insurance market in New Zealand,” Mr Jones said, noting the industry average combined operating ratio was 78.6% at the end of last year – an improvement on 97.9% a year earlier.  

Gallagher’s update says: “The market is in good shape with plenty of available capacity in most areas, meaning competitive tensions can be generated to drive better outcomes in premium and coverage.”