Insurance Market Update 2024

Economic slowdown and the rising frequency in both extreme weather events and social crime underscore the reality of changing market trends and risks for New Zealand businesses and homeowners alike.

We’ve shared below the key trends that may impact your risks and insurance premiums in our April 2024 Insurance Market Update. This includes recommendations to help safeguard your business, home and assets from unexpected loss or damage.

Key Takeaways

• Cyber-attacks: Cyber criminals are using increasingly sophisticated technologies (like artificial intelligence) to leverage critical assets for financial gain. The impacts can be financially devastating.

• Economic slowdown: High interest rates and inflation are both contributing to this risk.

• Business interruption: Business interruption costs can be significant if your business operations are temporarily halted due to an insurable event (such as a fire).

• Increased frequency of extreme weather events: We are seeing an increase in the frequency of natural catastrophes fuelling upward pressure on insurance pricing. The Auckland Anniversary floods and Cyclone Gabrielle are expected to cost the insurance industry NZ$3.75 billion, according to the Insurance Council of New Zealand. *

Local Market Conditions

Right now, the insurance landscape in New Zealand is in what we call a "hard market cycle”, however we are seeing signals that the market is softening and the level of price increase is moderating.

During a hard market cycle, insurers generally become more conservative with risk selection, increase their pricing, and reduce their capacity for insuring certain types of risks. Over the past year, we have witnessed many insurers doing just this and insurers are continuing to adopt a more conservative approach with reduced risk appetite, capacity allocation and increased pricing.

Recommendations

• Start renewal discussions early: Insurer resources are stretched causing delay in securing terms and limiting remarket options. We urge conservatism when budgeting for annual policy renewals.

• Secure up to date sum insured for your property assets: An insurance valuation is vital to ensure that your property is adequately insured in case of unexpected loss or damage.

• Consider policy structure options: Your broker may discuss a change to excess, a review of your scope of cover and alternate market solutions.

• Risk management: Review your risk management practices and risk mitigation.

• Take a “best foot forward” approach: Ensure your broker is provided with all of the information required to deliver a detailed and quality submission representing your business to market.

• Budget planning: Budget for continued premium increases across most portfolios in 2024. However, where accounts have had significant losses or located in flood-prone regions, expect further price increases and/or more restricted terms.

View our April 2024 Insurance Market Update

*Insurance Council of New Zealand: https://www.icnz.org.nz/industry/media-releases/gabrielle-and-auckland-anniversary-claims-settlements-top-90/