NZ insurance brokerage firm says market conditions can hike reinsurance costs

This could linger until the anticipated annual renewal cycle.

The continued rising costs of premiums, decreased insurance capacity and stricter regulations have dampened the New Zealand insurance market, according to insurance brokerage firm, Crombie Lockwood.

This trend is anticipated to endure for at least the upcoming annual renewal cycle as policies undergo evaluation and renewal, the firm noted.

These conditions stem from growing apprehensions about climate change, as indicated by the increasing frequency and severity of extreme weather events and natural disasters, both domestically and internationally. The instability of global financial conditions further contributes to these challenges.

The firm also examined rate increases for policies during the period of 1 January to 31 May.

Commercial portfolio average rate increases for non-earthquake perils and earthquake perils in 2022 stood at 4.93% and 6.96%, accordingly.

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Notably, the latest rates in the 1 January to 31 May period showed that both segments stood at 20.66% and 13.46%, respectively.

Persistent tough market conditions and increasing reinsurance expenses are driving insurance rates upward for property damage and business interruption coverage. 

Crombie Lockwood recommended clients remain unchanged: proactively collaborate with brokers and assemble a comprehensive submission for insurers. Doing so grants the broker ample time to negotiate terms effectively amidst these challenging market conditions.