AM Best is maintaining its stable outlook on New Zealand’s non-life insurance segment, based in part on improving economic conditions, increasing demand for insurance, improved reinsurance capacity and regulatory refinements that have strengthened market discipline. However, offsetting factors include operational challenges and cost pressures flowing from regulatory changes, in addition to ongoing concern around climate risk.

AM Best expects non-life premium growth to remain resilient. 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.

“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,” said Yi Ding, associate director, AM Best.

Following legislative and regulatory reforms, such as the Contracts of Insurance Act 2024, insurers are actively pursuing 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.

As a relatively small market that is highly exposed to natural perils, New Zealand’s non-life insurance segment remains heavily dependent on the international reinsurance market. In 2025, non-life insurers benefited from improved global reinsurance conditions, characterised by greater capacity and moderating pricing, particularly across non-loss affected lines. AM Best expects this trend to continue. According to the report, absence of major natural catastrophe events in New Zealand in recent years has further supported stability in reinsurance pricing.

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 in order to ensure fair and transparent customer outcomes and address legacy conduct issues. “These investments continue to weigh on short-term profitability, with any significant benefits expected to materialise over a longer time horizon,” Ding said.

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=359812.

AM Best will discuss New Zealand’s insurance industry in further detail at its Insurance Market Briefing – Auckland, which will take place at 3:30 p.m. (GMT+13) on Thursday, 13 November 2025, at Level 2/204 Quay Street, Auckland. Presentations and a Q&A session will run to 5:30 p.m. (NZDT); a networking reception will immediately follow. To register or for more information about the market briefing, please view the event page and agenda here.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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