Global trends, local responses: Influencing New Zealand’s insurance industry

Policyholders globally now expect speed, hyperpersonalised solutions, and connected experiences across digital and human touchpoints. Customer experience is increasingly driving retention and growth, with satisfaction closely linked to stronger mobile apps and digital platforms. In life insurance, trust and longterm personalised guidance remain paramount, and digitally-enabled advice models are delivering materially higher retention and cross sell rates than product-led peers . Group insurers, offering insurance and employee benefit products through employers , can differentiate by embedding technology solutions directly into employer platforms personalised solutions, and connected experiences across digital and human touchpoints. Customer experience is increasingly driving retention and growth, with satisfaction closely linked to stronger mobile apps and digital platforms.

New Zealand consumers are likely to hold similar expectations, shaped by digital-first experiences in banking and retail. Given New Zealand’s exposure to severe weather events, the global emphasis on empathetic, efficient claims experiences during vulnerable moments may resonate strongly with local policyholders and insurers alike.

To stand out, New Zealand insurers should consider investing in right-channelling strategies that direct customers to the most effective service channel based on their needs. The human touch is likely to remain central during high-stakes interactions. Continuous feedback loops and behavioural analytics could support greater personalisation.

The frequency and severity of natural catastrophes continue to escalate globally, from floods in Germany to wildfires across the United States, Canada, and Australia. These events are making risk transfer more expensive through tightening reinsurance terms and increased risk retention, contributing to a US$183 billion global protection gap. In many developed markets, reinsurance capacity has become more volatile driving sharper pricing cycles. Insurers and governments are responding with more proactive, data-driven approaches to risk management.

Given New Zealand’s well-documented vulnerability to natural disasters, these global dynamics are likely to have direct relevance for local insurers. Pressure on pricing, availability, and reinsurance arrangements may intensify as climate volatility persists worldwide.

In this context, Treasury noted that residential insurance affordability has come under sustained pressure, as home insurance premiums have risen significantly faster than inflation since 2011. These challenges are most acute in regions facing heightened earthquake and flood risk. Contributing factors include:

• Rising construction and reinsurance costs
• Risk-based-pricing e.g. for climate-exacerbated risks
• Market structure and competition environment
• Regulatory barriers and prudential regulation.
  

Internationally, insurers are navigating significant regulatory shifts. The United States’ One Big Beautiful Bill Act maintains the 21% corporate tax rate while introducing tax benefits for capital expenditures, though global minimum tax rules under Pillar Two create ongoing complexity. Regulatory scrutiny of private equity investments in insurance is intensifying, with authorities developing guiding principles to enhance transparency in capital calculations.

While New Zealand operates under its own prudential regime, global moves toward tighter scrutiny are relevant given the sector’s heavy reliance on offshore reinsurance and cross border capital flows. As the RBNZ underscores the importance of reinsurance to the sector’s resilience, it is worth monitoring international developments in reinsurance oversight for any potential long-term relevance to New Zealand’s regulatory environment.

The Government has recently initiated a review to better understand the impacts of rising premiums on residential insurance uptake and levels of underinsurance. The review will be led by the Council of Financial Regulators, comprising the Reserve Bank of New Zealand, the Financial Markets Authority, the Commerce Commission, the Ministry of Business, Innovation and Employment, and the Treasury. As part of this work, the Commerce Commission will undertake an initial market assessment of the residential insurance sector, with input sought from other government agencies as well as industry stakeholders.

The review will be undertaken in two phases. Phase one will involve a six month, focused discovery phase aimed at addressing key data gaps and examining the drivers of residential insurance pricing and affordability, including customer outcomes and market dynamics. This phase will also consider approaches taken in other jurisdictions. Phase two will focus on assessing potential policy implications and options.

New Zealand insurers should consider treating fair customer outcomes as fundamental to strategy rather than mere compliance. Monitoring international developments in tax and capital rules may prove valuable for anticipating future regulatory directions. Proactive preparation for regulatory change could position carriers to adapt smoothly.

Globally, the property and casualty segment is moving beyond a prolonged hard cycle into margin pressure and slower premium growth. In the US, the combined ratio is predicted to rise from 97.2% in 2024 to 99% by 2026, and ongoing broker consolidation is reducing insurers’ leverage in negotiations. Life insurance growth is forecast to slow in advanced markets amid uncertainty in the US policy environment. In response, carriers increasingly forming strategic alliances with asset managers to access investment expertise and capital efficiency.

There may be opportunities for New Zealand insurers to innovate and collaborate to balance equity and resilience. Advancements in geospatial analytics, satellite imagery, and IoT sensors offer potential tools for real-time monitoring and loss prevention. Nature-based solutions and partnerships with government agencies could play a key role as insurers support communities to build resilience.

To position for growth, New Zealand insurers should consider exploring differentiated strategies including proprietary products, enhanced broker relationships, and targeted segments such as small businesses and gig workers. Strategic partnerships may offer pathways to new capabilities without substantial capital deployment. Fee-based risk management services represent an emerging revenue opportunity worth evaluating.

New Zealand insurers can enhance their resilience and competitiveness by strategically responding to these global trends. Keeping pace with technological innovation, adopting sustainable practices, and staying ahead of regulatory change will be essential. These combined efforts could position New Zealand insurers to navigate the evolving global landscape effectively, achieving sustained growth and long-term success in a competitive market.