As competition returns to the insurance markets after several years of pricing pressure, opportunities are emerging for businesses looking to renew policies and take advantage of the current favourable environment.

Mark Jones, chief broking officer with Gallagher, says the insurance market in New Zealand has been going through a “hard market cycle” for the past two to three years, with prices increasing and capacity reducing.

“This has been driven by external pressures on insurance companies, including significant climate change-related losses globally in 2023. However, the market has stabilised, with lower-than-expected losses in New Zealand over the past 24 months,” Jones says.

Combined with easing inflation and supply chains becoming more stable, this means the insurance market has gained momentum, with improving conditions for both insurers and policyholders, he adds.

Get in early and negotiate

In the current environment, the two largest insurers in New Zealand – IAG and Suncorp, which trade mainly as NZI and Vero respectively – are going to try and hold or increase their market share through competitive pricing.

“It is creating competitive tension in the local insurance market, which is keen to retain market share and prevent capacity shifting offshore,” says Jones.

“We’ve got a relatively small insurance market in New Zealand that is dominated by Vero and NZI – and really the main thing they’ve got to trade is lower prices.”

The best approach for businesses is to engage early with a broker, who will be able to help create a thorough submission and advise the most effective strategy for market engagement.

“The more time you have, the more negotiating power you hold with insurers,” advises Jones. “If you wait until the last minute to go to market, you won’t be in the best position to get the most favourable outcome.”

Customers already reaping benefits

This dynamic will continue until something shifts – such as capital leaving the market, which would mean less capacity and could drive prices up. Another factor could be an increase in severe climate-related events.

“We’ve become used to global climate and natural disaster losses averaging around $100 billion a year – that’s the new normal,” says Jones. “But if we suddenly had a year with $200 billion in losses, everything would change. Pricing would likely spike again, or at the very least, stop declining.

“However, right now, unless there’s some external shock, nothing is likely to change significantly.”

Businesses are already reaping the benefits, he adds, with the market overall swinging in favour of the insurance buyer.

“We started to see a drop in pricing gather momentum towards the end of 2024 – and some of the things we are seeing in the market at the moment are astonishing,” he says.

“In some cases, we have seen premium savings of up to 25% on renewals. Even if that kind of saving is not sustainable in the long term, it would be foolish not to take advantage of what is being offered in the market right now.” 

Contact your Gallagher broker to discuss your insurance policies

Call: 0800 435 568

Email: [email protected]

Gallagher is a CA ANZ Member Benefits Program partner. Find out more about exclusive offers here: Gallagher New Zealand.