New Zealand’s financial and insurance sector is facing some of the weakest competitive pressure in the economy, according to a new report by the Commerce Commission that warns declining business dynamism could raise costs and reduce innovation over time.
The report, The State of Competition in New Zealand – 2026, analysed 22 years of Stats NZ firm-level data covering the period from 2001 to 2023 to establish benchmark measures for monitoring competition across industries.
Commerce Commission chair Dr John Small said the findings presented a mixed picture for the wider economy.
“The report finds that while business concentration has reduced on average, competitive pressure has weakened in many parts of the economy,” he said.
Among the sectors identified as having the weakest competition were electricity, gas, water, and waste services, as well as financial and insurance services.
The report ranked “Financial and insurance services” among the four least competitive industries in New Zealand over the review period, alongside mining and telecommunications-related sectors. It also found the industry showed one of the strongest indications of worsening competition trends between 2001 and 2023.
According to the Commission, declining business dynamism was a key concern across the economy. Entry and exit rates for businesses fell over the period, while new firms struggled to gain market share and larger incumbent businesses became increasingly entrenched.
Dr Small said the findings suggested smaller and newer businesses were finding it harder to challenge established firms.
“This suggests that market conditions are favouring larger incumbent businesses and, while smaller, newer businesses may be able to enter markets, it is harder for them to displace the established players,” he said.
The Commission noted that financial and insurance services are “upstream” industries that provide essential inputs to other sectors of the economy. Weak competition in such industries can have broader economic effects, including higher costs filtering through to households and businesses.
The report said some industries with greater exposure to imports generally experienced stronger competition, although the relationship varied depending on how industries used imported goods and services.
While concentration measures across the economy showed modest improvement, the Commission cautioned that no single indicator provides a complete picture of competition. The analysis relied on administrative business data and did not fully capture factors such as overseas competition, product quality, innovation, or informal business activity.
Small said the report would serve as a foundation for future monitoring and policy development aimed at promoting fair, dynamic, and competitive markets.
