Analysts from investment firm Forsyth Barr have identified Tower Limited’s new partnership with Westpac New Zealand as a move with significant long-term implications for the country’s general insurance sector.
According to analysts James Lindsay, Will Twiss, and Georgio Toulis, Tower’s appointment as Westpac NZ’s general insurance provider is expected to bolster the insurer’s distribution network and support its ambition to grow its share of the New Zealand market.
“This arrangement positions Tower to capture new-to-bank and switcher flows,” the analysts told Interest.co.nz, referring to customers joining Westpac NZ or transferring from other banks.
The analysts project that the partnership could contribute to Tower’s gross written premium (GWP) growth target of 10% to 15% by 2027.
If Tower secures 35% of Westpac NZ’s insurance book, the analysts estimate the deal could add approximately $70 million in GWP by 2030.
The change follows Westpac NZ’s recent request for proposal (RFP) process, which sought a new strategic insurance partner.
Tower will take over as the underwriter for the bank’s house, contents, motor, and landlord insurance products starting July 2026. This marks the end of a partnership with IAG NZ that has lasted more than 30 years.
The RFP process allowed Westpac NZ to evaluate proposals from several insurers. Tower’s selection is viewed as a notable shift in the bank’s approach to general insurance distribution.
“We’re pleased to be partnering with an innovative locally owned and operated general insurer with a strong customer focus,” said Sarah Hearn, Westpac NZ’s managing director of product, sustainability, and marketing.
The insurer said: “Naturally, we are disappointed by the outcome of Westpac’s RFP process.”
IAG NZ will continue to offer renewals to existing Westpac NZ insurance customers as their policies expire.
Forsyth Barr analysts noted that while Tower will underwrite new policies from July 2026, it remains to be seen how many existing customers will choose to switch.
Customers will have the opportunity to review Tower’s risk-based pricing and make changes if it is beneficial.
The financial terms of the new partnership, including the commission Tower will pay to Westpac NZ, have not been disclosed.
For reference, Tower paid a 1.83% commission on other partnerships in the first half of 2025.
IAG NZ’s 2025 report indicated that bank partnerships contributed to premium growth of $616 million, with Westpac NZ representing an estimated $150 million to $200 million of that total.
The analysts highlighted that the partnership could play a significant role in Tower’s 2027 GWP target of $656 million, given the bank’s contribution to IAG NZ’s premium pool.
“This deal provides additional scope for Tower to meet its 2027 GWP growth ambitions (10% to 15%),” they said.
While immediate changes to GWP are not anticipated, the analysts believe the long-term potential for Tower is considerable. The initial five-year agreement provides Tower with an opportunity to introduce its broader product suite to Westpac NZ customers.
Tower chief executive Paul Johnston commented on the digital focus of the new partnership.
“Through this partnership, we’ll deliver data-driven insurance experiences integrated into Westpac digital banking,” he said.
He added that customers will be able to purchase, manage, and claim on policies online and access Tower’s risk-based pricing and natural hazard risk information within Westpac’s online banking platform.
