As a consequence, the Reserve Bank of New Zealand took action on 8 October by cutting the Official Cash Rate down to 2.5 percent, with a further reduction to 2.25 percent expected by November.

Some improvement in economic activity is expected from the third-quarter GDP, but this remains uncertain - time will tell.

"Cautious behaviour by households and businesses could slow the economic recovery, reducing medium-term inflation pressures”

Inflation – New Zealand

As of 20 October 2025, New Zealand’s annual inflation rate has risen to 3%. This adjustment comes as no major surprise, and the general expectation is that inflation will ease again - likely below 3% by mid-2026.

The largest contributors to annual inflation appear to be:

• ⚡ Electricity – up 11.3%
• 🏠 Rent – up $2.6%
• 🏛️ Local council rates and payment – up 8.8%

As mentioned previously, we are seeing premium rates flatten out and soften in certain sectors of the New Zealand economy. Assuming no large-scale insurable events or losses, this trend is expected to continue well into 2026. Generally, residential and domestic premium rates remain stable, while some commercial premiums are softening — provided there is sufficient competition within the market.

Stable premium rates, particularly for well-managed properties and businesses, remain essential for economic recovery.

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.

Nearing the bottom of this economic cycle - Acknowledging the Positives

We now see inflation sitting at the high end of the Reserve Bank of New Zealand’s target band of 1–3%. However, economic activity remains subdued and net immigration rates are low, so the expectation is that inflation will ease back below 3% in 2026.

• Another 25-basis-point cut is expected in November. A lower interest rate environment should give businesses and households more confidence, which in theory will support improved trading conditions in 2026.
• Construction activity is expected to pick up. Review your sums insured — while inflation in many segments remains stable, a careful review is still recommended.
• We continue to see additional insurance capacity entering the market, particularly within the commercial segment and related risks. Current pricing should be challenged, as this can improve cash flow when paired with a strong risk management plan.

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.

Contact Us Today