New Zealand’s general insurance market remains in a soft phase, with Gallagher’s March 2026 Insurance Market Update indicating that conditions have continued to ease since the third quarter of 2024. The broker links this to below‑average global catastrophe losses, high levels of re/insurance capital, and increased 2025 insurer profits, while also warning of a possible profitability “tipping point” within the next six months.
Gallagher reports that global insured losses in 2025 were about 5% below the recent 10‑year average. Natural catastrophes generated an estimated US$296 billion in direct economic losses, of which private insurers and publicly funded schemes absorbed approximately US$129 billion. The remaining US$167 billion of losses were uninsured, leaving an estimated protection gap of 56%. Over the year, Gallagher records at least 58 individual events that each produced economic losses above US$1 billion, with at least 23 of those also resulting in insured losses of US$1 billion or more. Despite this activity, the (re)insurance sector enters 2026 with what Gallagher describes as a record US$838 billion of capital available for deployment. This environment is associated with the continuation of soft market conditions in New Zealand. According to Gallagher, most segments remain favourable to buyers, even with several weather‑related loss events across the country in 2025 and early 2026.
Gallagher’s review of local financial results shows increased profitability through the year to June 30, 2025. IAG – which includes NZI, State, and AMI – recorded profit growth of about 50% over that period. Suncorp – which includes Vero and AA Insurance – reported profit growth above 40%, while QBE reported a 27% increase in profit in its June 2025 half‑year result. More recent half‑year disclosures indicate early signs of soft‑market strain on premium volumes. Both IAG and Suncorp reported declines in New Zealand gross written premium. IAG’s intermediated business, including NZI, fell 10.4%, while Suncorp, trading as Vero in New Zealand, reported a 5.6% decline in New Zealand GWP.
Insurers have linked these developments to market conditions. IAG cited a “challenging New Zealand commercial market, with solid profit result reflecting ongoing underwriting discipline,” while Suncorp stated that “GWP impacted by challenging market conditions in commercial due to the soft market cycle.” Gallagher notes that its New Zealand claims volumes appear to be returning toward more typical levels after the elevated events of recent years.
At the same time, the broker points to potential claims inflation from geopolitical developments in the Middle East, which could affect supply chains and input costs such as oil, drawing comparisons with the COVID‑19 period and the early phase of the Russia‑Ukraine conflict. Gallagher anticipates that, within about six months, falling premiums and normalised claims costs could intersect, putting downward pressure on insurer margins and leading to a flatter market. The broker expects early indicators to include more selective underwriting and narrower application of pricing relief for commercial risks.
Gallagher’s claims data shows that recurring severe weather remains a major driver of loss activity. In 2025, insurers issued 36 weather‑related event codes, which generated 2,249 claims from Gallagher clients, representing roughly 9.8% of the broker’s total claims count. The current La Niña pattern, combined with warmer sea surface temperatures, is increasing the likelihood of tropical systems and periods of intense rainfall. Recent large losses for Gallagher clients have also involved fires affecting supermarkets, schools, rugby clubs, and recycling operations. The most frequent ignition sources identified are arson, hot works, and lithium batteries. Incidents involving lithium batteries are becoming more common as these products see wider use in consumer and commercial settings and can result in extensive property damage.
Cyber incidents continue to rise in both frequency and impact. Gallagher reports losses arising from business email compromise, payment fraud (including bank impersonation), ransomware events, network intrusions, and privacy or data‑handling breaches caused by employees. The range of incident types underlines the need for clear cyber controls, which remain a focus for underwriters when assessing risk quality and coverage terms. Motor claims are being affected by increased vehicle theft, supported in part by tools that can bypass keyless ignition systems. For newer vehicle brands with limited local parts supply and service networks, repair times can be longer and claims can remain open for extended periods, which adds to overall claim costs. Operationally, Gallagher observes that the average time to settle a claim in its New Zealand portfolio has fallen by nearly 55%. The broker attributes this reduction to digital lodgement platforms and closer systems integration between brokers and insurers.
Marsh’s New Zealand Insurance Market Update, published in February 2026, broadly aligns with Gallagher’s view of a soft market and provides additional detail on reinsurance and class‑specific conditions. According to Marsh, global reinsurance costs eased in early 2026, with average rate reductions of more than 12.5%, supported by large capital positions and fewer large catastrophe losses than in recent years. This has reinforced primary carriers’ balance sheets and expanded their appetite for many classes of risk, contributing to lower pricing, increased capacity and, in some instances, adjusted coverage terms.
Marsh notes that insurance capacity for New Zealand risks continues to grow, with greater competition among insurers for commercial accounts. For property programmes, many insureds obtained premium reductions in 2025, and Marsh expects that pattern to continue into 2026 in the absence of major loss activity, although outcomes remain dependent on location, construction, flood exposure, and asset maintenance standards.
Across liability and professional indemnity, cyber, directors’ and officers’, motor fleet and mobile plant, construction, and environmental liability, Marsh describes conditions as stable or easing for buyers, with clear differentiation based on risk quality. Cyber premiums have levelled off, but Marsh cautions that carriers expect effective cybersecurity controls, and organisations without basic protections may find it more difficult to secure cover. In environmental liability, Marsh reports rising demand as organisations develop ESG frameworks, with growing capacity and broader risk appetite expected to influence rates through 2026. In group life, disability, and health benefits, Marsh outlines mixed conditions as mental health‑related claims and medical inflation are balanced by competition for schemes with favourable claims experience.
Both Gallagher and Marsh point to forthcoming regulatory and policy changes with implications for insurance pricing, structure and risk selection. The Resource Management (Consenting and Other System Changes) Amendment Act 2025 is designed to support the transition to a new resource management system and strengthen compliance and enforcement. Separately, reforms to the treatment of earthquake‑prone buildings are moving toward a more targeted, risk‑based model, which may reduce obligations for some property owners while increasing focus on higher‑risk structures.
From July 1, 2026, changes to the Fire and Emergency New Zealand (FENZ) levy – including revised levy rates and updated application rules across property categories – will take effect, altering overall insurance‑related cost structures. At the same time, the government’s National Adaptation Framework is intended to support long‑term climate resilience and improve the flow of hazard and risk information. Marsh notes that these developments increase the importance of accurate valuations, asset data and risk information for both rating and compliance. Taken together, the Gallagher and Marsh updates suggest that, while underwriting conditions remain supportive for buyers, insurers are placing greater weight on demonstrable risk management, reliable data, and governance, which may become more influential if margin pressure intensifies later in 2026.
