NZ General Insurance Market Update - July 2025

06 August 2025

End of Quarter 2 - 30 June 2025 Over the past quarter, economic activity has remained subdued, reflected in lower building cost inflation and a flat housing market. At the same time, the cost of essentials—including food, accommodation, and energy—rose by 4.2%. This presents a mixed local picture, which is further complicated by ongoing global uncertainty and rising cost pressures abroad.

9 July 25 - The official cash rate (OCR) maintained at 3.25% (from May 2025) with some commentators suggesting it should be at 3% (or lower) given our weaker growth forecasts.

The RBNZ's Monetary Policy Committee noting that:

"The economic outlook remains highly uncertain. Further data on the speed of New Zealand's economic recovery, the persistence of inflation, and the impacts of tariffs will influence the future path of the Official Cash Rate”.

Update on Insurance Costs – New Zealand

30 June 25, - Overall Inflation rose to 2.7%. Our latest GPD figures showed a modest quarterly growth rate of 0.8% against a -1.1% annual rate – the next GDP read is due around Thursday, 18 September 25. These figures are, in a sense, backward-looking; and we recognise that for many, conditions on the ground remain challenging.

A significant aspect of the overall inflation picture remains non-tradable inflation, which has reduced to 3.7% as of 30 June 25 (was 4.0% in March 25). Non-tradable inflation reflects the service sector and price increases including council rates up on average 12%, power/electricity costs climbing to 9.1% annually. Insurance-related costs have flattened out, but the data still reflects a 6% annual rate of increase.

As mentioned previously we are seeing premium rates flatten out and soften in certain segments of the NZ economy. We are expecting (assuming no large-scale insurable events/losses) this trend to continue well into this year. In general, we are seeing stable residential-domestic premium rates and certain commercial related premiums soften assuming insurance competition exists for a particular business.

Stable premium rates especially when it comes to well managed properties and businesses is a welcomed development.

Risk based pricing models naturally favour lower-risk profiles, resulting in more competitive premiums. It's important for you to keep this in mind when considering any potential investment decisions.

Trends in the insurance space:

Insurance Company returns have benefited from recent reduced claim volumes against higher net premiums. This has been aided by the declining large-scale weather events (fingers crossed), lower global reinsurance costs, improved capacity levels, and stable inflation.
Inflationary pressures within claim settlements and associated costs to insure are reducing.
Reinstatement values should be reviewed to ensure your sum insured reflects current and adjusted replacement costs.
We expect insurers to pursue premium growth with a desire to improve their risk portfolios, which is a positive development likely to drive increased competition across the industry.

Green Shoots continue - Acknowledging the Positives

Inflation is currently within the RBNZ target band of 1-3% though there remains some risk of it rising above 3% driven by factors such as tariffs and global interest rates trends.

We are expected to enter a rate cutting cycle through the second half of 2025.
Construction inflation has reduced. Assuming your cover is reviewed annually, your sum insured should, in many cases should remain stable with expected careful and considered review.
We continue to see more insurance capacity available in New Zealand for commercial related risks, likely due to current pricing. This should benefit certain commercial clients.

How aibGROUP Can Help You Navigate the Current Insurance Cycle

By speaking with one of our insurance advisers about your circumstances and assets, we can tailor solutions that support your insurance needs and protect what matters most.

Our team will present all available options—such as adjusting excess levels—and provide expert advice tailored to your needs. The value of professional guidance, strong insurer relationships, and personalised service has never been more important. Contacting us is easy, and we’re committed to acting as your advocate, building a close, trusted partnership.
We proactively review your cover and recommend any necessary changes without delay. Our experienced claims team operates independently from insurers, ensuring you receive the full benefits of your policy when it matters most.
For buildings and homes, we recommend obtaining a professional insurance valuation. This helps eliminate guesswork from online calculators or reliance on outdated inflation estimates. A qualified valuer also provides an added layer of protection if your declared value is ever challenged.

Other ways we can add value to your insurance journey include:

Access to fast-track claims processing with select insurers, and close collaboration with insurance assessors for non-fast-track claims—ensuring they are handled efficiently and correctly. We keep you informed with regular updates throughout the process.
Referrals to professional insurance valuers at discounted rates through our partnership with NZbrokers.
Years of experience and understanding of the local market, which has consistently delivered positive outcomes for our clients over the years.
A strong team culture focused on continuous development, ensuring we stay current and proactive in an ever-changing insurance landscape.
Community support through sponsorship and volunteering, reflecting the values we share with many of our clients and helping to strengthen our local partnerships.

Additionally, like many of our clients, we support local non-profit community organisations through sponsorship and volunteering, continuing to build those partnerships and connections.