Will regulatory shifts shape NZ non-life insurers’ outlook?

New regulatory requirements continue to raise costs for insurers.

New Zealand’s non-life insurance market’s stable outlook may be offset by operational challenges and cost pressures flowing from regulatory changes, in addition to ongoing concern around climate risk, AM Best said.

The outlook will likely be driven by improving economic conditions, increasing demand for insurance, improved reinsurance capacity and regulatory refinements that have strengthened market discipline.

AM Best expects non-life premium growth to remain steady. Households continue to face cost-of-living pressures, high debt levels and weak real wage growth, but the economy is forecast to recover as monetary policy shifts toward easing. 

Yi Ding, associate director at AM Best, said premium growth will also be supported by rising demand for natural catastrophe and cyber coverage as risk awareness increases.

Regulatory changes, including the Contracts of Insurance Act 2024, are prompting insurers to simplify products. 

Companies are updating policy wording, offering more flexible coverage and pricing, expanding digital channels and aiming for fairer claims handling. 

AM Best said these measures are improving customer experience and supporting premium growth.

New Zealand remains a small market with high exposure to natural disasters, making it reliant on international reinsurers.

Insurers benefited in 2025 from better reinsurance conditions, with more capacity and moderating prices across non–loss affected lines. 

AM Best expects stable reinsurance pricing to continue, helped by the absence of major natural catastrophe events in recent years.

However, new regulatory requirements continue to raise costs for insurers. Many firms are investing heavily in systems and data upgrades to meet customer protection rules and address legacy conduct issues. 

AM Best said these expenses are weighing on short-term profitability, with benefits likely to appear over a longer period.