Gallagher Insurance New Zealand’s November 2025 Insurance Market Update describes a continuing soft market across most lines, associated with comparatively low recent catastrophe losses, solid reinsurer and insurer capital positions, and active competition for business.
Gallagher reports that, despite notable spring weather events, New Zealand’s aggregate claims volumes and values remain below longer-term expectations in several classes. This is broadly consistent with global experience. From the first to the third quarter of 2025, global natural catastrophe insured losses were about US$105 billion, the lowest level since 2019 and below the 10-year rolling average of US$114 billion for the same period. This figure includes the California wildfires early in the year, which alone generated an estimated US$40 billion of insured losses, and reflects quieter-than-forecast tropical cyclone activity in the Atlantic and Pacific.
According to Gallagher, the soft market conditions that first appeared in the third quarter of 2024 are now established in New Zealand. Capacity remains available across many segments, and competition among insurers is limiting upward pressure on premiums. The report notes that a large local or international catastrophe event would likely be required to trigger a broad shift in the current pricing cycle.
The report notes that global reinsurers are reporting higher profitability, with average margins around 17.7%, and that this has attracted additional capital into the sector. Gallagher cites an increase in reinsurance-dedicated capital to approximately US$805 billion in the first half of 2025.
For New Zealand insurers, reinsurance is a major operating expense. Gallagher observes that the growth in global reinsurance capacity has contributed to lower reinsurance pricing for local carriers. When combined with a relatively benign claims environment, this has allowed insurers to record improved earnings despite slower premium growth. NZI is cited as one example. For the year to June 30, 2025, its gross premiums declined 2.6%, from NZ$1.861 billion to NZ$1.812 billion, while its insurance margin increased from 23.3% to 24.3%. Gallagher indicates that comparable trends are evident elsewhere in the domestic market.
Data from the Insurance Council of New Zealand (ICNZ), whose members write about 95% of New Zealand general insurance business, show that the industry’s average combined ratio moved from 97.9% in December 2023 to 78.6% in December 2024. Over the same period, key classes recorded changes in loss ratios:
Gallagher notes that gross written premium increased between 2023 and 2024, but suggests this growth is likely to slow or reverse if current soft market conditions continue, even as underwriting measures remain improved compared with earlier periods.
The update discusses the Reserve Bank of New Zealand’s (RBNZ) 2024 General Insurance Stress Test, released in May 2025. The exercise examined the capacity of participating insurers to meet obligations under several adverse scenarios, including a severe earthquake.
Under a modelled magnitude 8.7 seismic event, which would exceed the scale of the 2010-11 Canterbury earthquakes, the RBNZ concluded that insurers would still be able to pay all policyholder claims. In parallel, the central bank is continuing its review of solvency standards to ensure that licensed insurers maintain capital and liquidity levels that are adequate to absorb large natural catastrophe losses and market volatility.
Gallagher also outlines changes in how major New Zealand insurers are structuring and distributing their products. NZI has deployed additional capacity through two independent underwriting agencies focused on rural and personal lines. These arrangements make use of technology-based platforms for distribution and servicing.
Vero’s parent, Suncorp, has sold its stake in a large bank and a life insurance company so it can concentrate on general insurance operations. Gallagher presents these developments as part of a broader pattern of insurers narrowing activity around property and casualty portfolios and using partnerships and specialist agencies to reach particular customer segments and alternative channels.
On the legislative side, the report highlights the Resource Management (Consenting and Other System Changes) Amendment Act 2025, which received Royal assent on Aug. 20, 2025. The amendments strengthen the compliance and enforcement framework under the Resource Management Act (RMA) 1991 and materially increase penalties for environmental offences.
Under the new settings, maximum fines for individuals will rise from $300,000 to $1 million, while the maximum term of imprisonment will reduce from two years to 18 months, with cases to be heard by a judge alone. For corporate defendants, maximum fines will increase from $600,000 to $10 million.
The amendments also confirm that insurance cannot indemnify fines imposed under the RMA, aligning the position with the Health and Safety at Work Act (HSWA), under which fines have not been insurable since 2003. Statutory liability insurance can still respond to defence costs associated with investigations and prosecutions. Gallagher notes that these changes are likely to focus attention on environmental risk assessments, limits, sublimits, and coverage wording in statutory liability programmes.
Gallagher’s update outlines upcoming changes to Fire and Emergency New Zealand (FENZ) levies, which are collected through property and motor insurance to fund national fire and emergency services. From July 1, 2026, the commercial property levy rate will decrease from 11.95 cents to 7.76 cents per $100. At the same time, the calculation basis will move from indemnity value to the full sum insured. Policyholders who currently pay levies on indemnity values will not be able to continue that approach. Where indemnity values sit well below replacement sums insured, the total levy cost may rise despite the lower rate.
The reforms will also change some exemptions and apply specific rates and caps for certain categories of assets, including livestock, forests, and aircraft. For commercial motor vehicles over 3.5 tonnes, levies will shift from a sum‑insured‑based commercial rate to a flat $25 charge, which will become the standard levy for all vehicles regardless of size.
Gallagher concludes that the combination of soft pricing, lower recent loss experience, and higher capital levels may lead insurance buyers to reassess their programmes. The report notes that “the market is in good shape with plenty of available capacity in most areas, meaning competitive tensions can be generated to drive better outcomes in premium and coverage.”
