GlobalData has been thinking about the GI market in NZ, which also has a fast growing insurtech hub in Auckland by the way. Here’s the report preview from GlobalData;
The New Zealand general insurance industry is set to grow at a compound annual growth rate (CAGR) of 7.3% from NZD9.7 billion ($5.8 billion) in 2024 to NZD12.9 billion ($7.6 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.
GlobalData’s Insurance Database reveals that the general insurance industry in New Zealand is expected to grow by 8.3% in 2024, supported by property and motor insurance lines, which together accounted for nearly 75% of the total general insurance GWP in 2023.
Sneha Verma, Insurance Analyst at GlobalData, comments: “New Zealand’s general insurance industry is expected to witness a growth of 10.1% in 2023 after growing by 10.9% in 2022. The growth is supported by a rise in the demand for natural catastrophic (nat-cat) insurance policies due to an increase in the frequency of extreme weather events and an increase in premium prices across most of the insurance lines driven by inflation.”
Property insurance is the leading line of business in the New Zealand general insurance industry, accounting for a 41.7% share of the general insurance GWP in 2023. According to Stats NZ, the official data agency for New Zealand, contents insurance premiums witnessed an increase of 23.8%, and home insurance premiums increased by 23.1% in 2023 as compared to the previous year.
Increasing claims from weather events have prompted reinsurers to increase reinsurance rates. This will further increase the premium rates of home and agriculture insurance policies and support property insurance growth. As per the Insurance Council of New Zealand, home and content insurance premium prices increased by 12-13% in 2023, while agriculture insurance premiums increased by 30% as compared to the previous year.
The changes to the Earthquake Commission Cover (EQC) limit have also contributed to an increase in home insurance premium prices. In October 2022, EQC cover for natural calamities was doubled from $1,50,000 to $3,00,000, leading to an increase in the levy being paid by households to EQC by $180, irrespective of their location within the country.
Verma adds: “High inflation has also played a major role in an increase in property insurance prices. The annual inflation in New Zealand stood at 4.7% in 2023, much higher than the target band of 1% to 3% set by the Reserve Bank of New Zealand. Property insurance is expected to grow at a CAGR of 7.9% during 2024-2028.”
Motor insurance is the second largest line of business, accounting for a 32.9% share of the general insurance GWP in 2023. Motor insurance premiums grew by 9.4% in 2023, primarily due to premium rate increases driven by inflation and high claim payouts following Cyclone Gabrielle.
The car insurance costs in New Zealand in 2023 have seen a huge increase as compared to last year. As per the New Zealand Parliament’s Monthly Economic Review in February 2024, annual car insurance premiums increased by 30% on an average and reached $1,190 in the third quarter of 2023, as compared to $914 in 2022. The trend is expected to continue in 2024. Motor insurance is expected to grow at a CAGR of 6.3% during 2024-28.
Liability insurance accounted for a 9% share of general insurance GWP in 2023. It is expected to grow by 7% in 2024 and 6.5% in 2025, supported by mandatory classes of insurance such as professional indemnity insurance and rising incidents of cyber-attacks. According to the New Zealand Cyber Security Centre, there was a 20% increase in cyber incidents in 2023 as compared to the previous year. Liability insurance is expected to grow at a CAGR of 7.8% during 2024-28.
Marine, aviation, and transit (MAT), and other general insurance accounted for the remaining 16.4% share of the general insurance GWP in 2023.
Verma concludes: “A gradual recovery in the economy after the pandemic and rising premium prices will support the growth of the New Zealand general insurance industry over the next five years. The insurers’ profitability is expected to remain volatile due to high claims arising from frequent natural disasters and a subsequent increase in reinsurance rates.”
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