New Zealand’s insurers maintain strong solvency under strict regulations

Demand for non-life insurance is driven by exposure to natural hazards.

New Zealand’s insurance environment has shown robust regulatory conditions and good technical standards, Fitch Ratings assessed.

New Zealand's insurance industry operates under the Insurance (Prudential Supervision) Act 2010, ensuring a developed and transparent regulatory framework. 

Insurers adhere to a solvency-based capital regime, with stringent licensing requirements for key personnel, documented risk management protocols, and mandatory credit rating disclosures. 

The regulatory authority maintains regular oversight of insurers' capital adequacy and management practices to uphold sector confidence.

Fitch recognises New Zealand's insurance market for its technical sophistication, offering a diverse array of products. 

The presence of major international insurers further enriches the market landscape. 

Although life insurance as a retirement savings tool is less prevalent compared to other regions, the country's high household debt presents significant growth opportunities for life insurance products.

Demand for non-life insurance is bolstered by exposure to natural hazards.

The competitive environment in New Zealand's insurance sector is viewed as rational by Fitch, despite occasional challenges. 

Large international insurers' subsidiaries dominate the market, with the top-five insurers collectively commanding over half of total premiums in both life and non-life segments. 

The adoption of digital distribution channels has been sluggish, impacting operational efficiencies, particularly in the life insurance sector. 

Non-life profitability has experienced variability due to natural catastrophe losses, though recent price adjustments in certain categories have alleviated margin pressures.