Tower Limited has confirmed it will withdraw its multi-policy discount from its insurance offerings, following a review of its pricing processes and system upgrades.
The insurer said the move comes after efforts to ensure the discount was applied accurately across its customer base.
Interim chief executive Paul Johnston stated that while Tower has invested in system improvements to deliver accurate discounts, the complexity involved in administering the multi-policy benefit continues to present a risk of error.
“Despite these efforts and the substantial improvements made, the complexity of factors involved in accurately assessing the multi-policy discount means there is still a risk of error,” he said.
He added that this level of risk does not align with the company’s standards for customer service or regulatory compliance, prompting the decision to discontinue the discount.
The decision to end the discount follows the release of Tower’s half-year financial results, which showed an underlying net profit after tax of $61.7 million for the six months ending March 31, 2025. This compares to $36.6 million in the same period last year.
The insurer’s reported net profit was $49.7 million, up from $36 million previously.
Tower attributed the stronger results to improved claims experience, steady premium growth, and ongoing cost management.
The reported profit figure also included provisions for customer remediation and updated estimates for Canterbury earthquake claims, reflecting continued over-cap claims from the Natural Hazards Commission.
Gross written premiums (GWP) for the period reached $297 million, a 4% increase year on year.
Growth was led by the home and contents segment, which expanded by 11% compared to the previous year.
However, the average premium per policy was lower, which Tower said was due to a greater share of new policies for lower-risk homes and vehicles, as well as heightened competition in the local market.
The company’s motor insurance GWP declined by 4%, a result of earlier decisions to restrict underwriting in higher-risk areas.
Tower’s risk-based pricing model has also influenced the composition of its portfolio.
For new home insurance policies issued in 2025, 91% were classified as low or very low risk for flooding, up from 86% a year earlier.
Tower’s business-as-usual claims ratio improved to 38.1%, down from 49.7% in the previous half-year.
The insurer cited more stable weather, lower inflation, and a reduction in high-cost claims, particularly for total loss residential properties, as key factors. Enhanced risk selection and process improvements also contributed.
The management expense ratio fell to 30.4%, compared to 31.3% in the prior year, with operational efficiencies and premium growth cited as drivers.
Tower continues to focus on digital transformation and cost control.
During the half-year, the only major event was the October 2024 Dunedin floods, which resulted in $3 million in claims.
The impact of Cyclone Tam, which occurred in April 2025, is expected to be reflected in the second half, with an estimated cost of $4 million.
Tower has set aside $50 million for large event claims for the full year.
Johnston said Tower will continue to refine its underwriting and pricing models to strengthen portfolio quality and risk transparency.
“Tower is focused on continuing to grow high-quality risks while enhancing the company’s resilience and claims performance. This year, we will expand risk-based pricing to include sea surge and landslide risks, helping our customers better understand their risks and how these factors impact their insurance pricing,” he said.
