The New Zealand insurance market is experiencing one of its softest cycles in recent memory, with underwriters and brokers alike reporting a surge in capacity, competition, and appetite for risks that were previously uninsurable or unaffordable. For New Zealand-based insurance professionals, this environment presents both significant opportunities and new complexities requiring careful navigation.
Recent industry reports and financial results highlight several factors underpinning the current soft market in New Zealand. Healthy insurer returns, improved reinsurance conditions, and a global surplus of capital are fuelling increased competition and risk appetite among both domestic and international insurers.
Reinsurance market conditions have also eased. After several years of tightening terms and higher costs following global catastrophe losses, reinsurers are now offering more favourable terms and greater capacity. This has flowed through to primary insurers, enabling them to write more business and take on risks that would have been declined in previous years.
“With the soft market, what we're seeing is a lot more remarketing of risks,” said Petra Lucioli (pictured), group claims manager for Delta Insurance. “We're also getting to see an awful lot of risks that we wouldn't previously have seen and getting to quote on those when we wouldn't have otherwise done so.” Lucioli noted that, “Because there's a lot more capacity in the market, our capacity providers are very keen to work with us on new lines of business, increased capacity, and developing our markets here in New Zealand.”
This environment is allowing brokers to secure insurance across a wide range of previously unavailable or unaffordable risks. While the specifics vary, the most notable areas of new or improved cover include:
High-risk natural disaster exposures: Earthquake-prone commercial properties in Wellington or Christchurch, which struggled post-quake, are now seeing more insurers willing to underwrite or offer improved terms.
Unusual or non-standard construction: Buildings with non-compliant cladding or unique features are finding more options as insurers broaden their appetite.
Start-ups and new ventures: Tech start-ups and companies in emerging sectors (e.g., cryptocurrency, AI) are now more likely to secure liability and professional indemnity cover.
Adventure tourism: Operators offering activities like bungee jumping or white-water rafting are seeing more underwriters willing to provide public liability and accident cover.
Aged care and social services: Rest homes and disability care providers, often challenged by claims history or regulatory scrutiny, are benefiting from increased competition.
Environmental and pollution risks: Businesses with contamination exposures are finding more pollution liability options.
High claims frequency sectors: Hospitality venues such as bars and nightclubs are seeing more insurers willing to quote or offer higher limits.
Previously, brokers would have struggled to find affordable or any cover at all for these risks. Now, the soft market is enabling brokers to deliver broader solutions and more competitive pricing to clients across a diverse range of industries.
For New Zealand insurance professionals, the soft market is a time to be proactive and strategic:
Remarket and renegotiate: Now is the time to review all client portfolios, especially those with challenging risks or recent premium hikes. Remarketing can yield better terms, broader cover, or lower premiums.
Explore specialty markets: With Lloyd’s syndicates, international insurers, and local agencies all competing for business, brokers should canvass a wider range of markets than in previous years.
Advise on sustainability: While the soft market offers opportunities, it is also cyclical. Brokers should counsel clients on the importance of maintaining good risk management and not relying on current conditions to persist indefinitely.
Monitor capacity and claims trends: Stay informed about insurer appetite and claims trends, as a major catastrophe or shift in global capital flows could quickly tighten the market again.
The current soft market is providing New Zealand brokers with a rare window to deliver real value to clients – whether by finding cover for previously uninsurable risks, negotiating better terms, or simply broadening the range of options available. The challenge for brokers is to leverage these conditions while preparing for the inevitable return of a harder market cycle.
