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NZ Insurance Review Unlikely to Curb Rising Premiums

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  Published in Politics and Government on Wednesday, February 4th 2026 at 13:35 GMT by The New Zealand Herald
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Wellington, NZ - February 4th, 2026 - A government review of New Zealand's insurance industry, announced by Finance Minister Nicola Willis last week, is expected to do little to stem the tide of rising insurance premiums, according to industry experts. While the review aims to improve competition and transparency within the sector, the fundamental drivers of price increases - climate change and escalating reinsurance costs - remain firmly in place.

The review, prompted by warnings from both the Reserve Bank and the Commerce Commission regarding a lack of competition, will focus on data sharing practices amongst insurers and the overall functionality of the market. A discussion document outlining the scope of the inquiry is anticipated in early 2026, with public submissions to follow. However, analysts predict the review will primarily address systemic issues rather than directly controlling prices.

"The government isn't going to be directly controlling prices, and that's just not something they'll do," explains Bryce Judd, Head of Insurance at KPMG. "The focus will likely be on enhancing data sharing to foster greater competition and improving transparency around pricing models. But those are long-term solutions. The immediate pressures on insurers are far more significant."

The core issue, experts highlight, is that insurers are increasingly facing payouts that exceed premium income. This negative trend is directly linked to the escalating frequency and severity of extreme weather events fueled by climate change. New Zealand, being particularly vulnerable to these events - including floods, storms, and landslides - is experiencing a disproportionate impact on insurance costs.

"They're paying out more in claims than they're taking in premiums. And that's only going to get worse as climate change impacts continue," Judd emphasizes. This reality means insurers are compelled to raise premiums to maintain solvency and continue operating.

Katrina Shanks, CEO of Financial Advice NZ, echoes this sentiment, stating that the review, while a positive initial step, is unlikely to deliver significant short-term relief to consumers. "The biggest drivers of insurance pricing are the risks that insurers are having to cover," she says. "Addressing those risks requires a multifaceted approach that extends beyond the scope of a government review."

The rising cost of reinsurance - insurance for insurance companies - is another significant factor contributing to higher premiums. As global risks increase, reinsurance companies are demanding higher premiums, which are then passed on to consumers. This creates a cascading effect, amplifying the financial burden on homeowners, businesses, and individuals.

Paul Morgan, Senior Economist at Westpac, believes the review will concentrate more on improving regulatory oversight and transparency rather than halting premium increases. "The fundamental problem is that New Zealand is exposed to extreme weather events, and those events are costing insurers a lot of money. That cost is ultimately passed on to consumers," he explains. He predicts any positive effects from changes to regulation or data sharing will take considerable time to materialize.

Looking Ahead: Adaptation and Mitigation are Key

The situation paints a challenging picture for New Zealand's insurance landscape. While the government review may address some structural issues within the industry, it's clear that tackling the root causes of rising premiums requires a broader strategy. This includes significant investment in climate change mitigation and adaptation measures.

Some potential avenues for consideration, beyond the scope of the current review, include:

• Increased investment in flood defenses and infrastructure resilience: Protecting communities from extreme weather events will reduce the frequency and severity of claims.
• Incentivizing climate-resilient building practices: Building codes that prioritize resilience to extreme weather can reduce damage and lower insurance costs in the long run.
• Exploring alternative risk transfer mechanisms: This could involve government-backed insurance schemes or innovative financing solutions to share the burden of climate-related risks.
• Promoting greater public awareness of climate risks: Empowering individuals and businesses to understand and prepare for climate change can reduce vulnerability and lower insurance claims.

Experts are increasingly suggesting a national conversation on risk and affordability, recognizing that some areas may become uninsurable without significant intervention. The review provides a platform to start this dialogue, but a proactive, long-term approach is crucial to ensure that insurance remains accessible and affordable for all New Zealanders. The continuing upward trend of premiums is likely to persist for the foreseeable future, underscoring the urgent need for comprehensive solutions that address both the immediate financial pressures and the underlying drivers of risk.