AM Best is maintaining its stable outlook on the New Zealand life insurance segment, based in part on improving economic conditions, ongoing regulatory refinements that support market discipline, digitalisation efforts and robust capital adequacy levels among its insurers.

While there are indications that New Zealand’s economy is experiencing signs of a recovery, AM Best anticipates muted premium growth in the life insurance segment over the short-to-medium term. Persistent cost of living pressures, high household debt levels, and weak real wage growth continue to constrain discretionary spending on protection products.

According to the report, prolonged competitive pressures are expected to support product optimisation and promote heavier discounting and incentives for new customers. “These trends can erode new business margins and further increase lapse risk, which has been elevated in recent post-pandemic periods,” said Yi Ding, associate director, AM Best. “In addition, compliance and system investments linked to regulatory requirements continue to weigh on short-term profitability.”

The Financial Markets (Conduct of Institutions) Amendment Act 2022 (the CoFI Act), which took effect on 31 March 2025, requires insurers to operate under a fair conduct principle, ensuring policyholders are treated ethically and transparently throughout the product life cycle. Insurance companies have already absorbed substantial expenses to meet the IFRS 17 requirements, effective since January 2023. Now with CoFI implementation underway, insurers face further investment in governance frameworks, staff training, and technology to ensure compliance.

“Smaller insurers and those with large legacy portfolios are under greater pressure to modernise systems and strengthen oversight while maintaining profitability,” Ding said.

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=359759.

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 visit 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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