Marsh has unveiled its “New Zealand insurance market update 2023: Year in review,” providing an analysis aimed at those engaged with New Zealand's insurance industry.
The report delves into the intricate dynamics of the market, examining the effects of economic and environmental factors on insurance coverage, insurer preferences, and the fluctuation of rates across 12 distinct classes of insurance.
A significant portion of the analysis focuses on the repercussions of natural disasters, the pressure from rising inflation, the state of reinsurance capacity, and the critical importance of robust risk management strategies for policyholders.
The assessment indicated that while the property insurance market in New Zealand continues to navigate through turbulent waters as of 2024, there are emerging indicators of potential market stabilisation and recovery as the year unfolds, assuming no major disruptions occur.
Notably, the financial impact of two severe weather incidents in the early part of 2023, with a combined insured loss of around $3.5 billion, underscored the vulnerability of the local insurance landscape to climatic events.
Despite these challenges, there is a silver lining as the broader insurance industry showed signs of resurgence, with improved profitability, an influx of new capital investments, and a broadening of underwriting capacity.
The liability insurance segment, which includes coverage for directors and officers (D&O) and cyber risks, presented a somewhat brighter outlook.
The year 2023 saw a steadying of the market and a reduction in rates for entities that demonstrate effective risk management. Conversely, buyers of professional indemnity (PI) insurance encountered ongoing obstacles, particularly within specific sectors.
The construction insurance market is bracing for continued upward pressure on rates through 2024, fuelled by persistent claims activity. Locations prone to natural disasters, notably Wellington, face heightened insurance challenges.
In the realm of group life insurance, concerns over the sustainability of pricing models for long-term disability benefits are mounting, propelled by an increase in claims related to stress and mental health issues.
Furthermore, the sector of health insurance is wrestling with the implications of medical cost inflation on pricing strategies.
Marsh published its New Zealand insurance market update following the release of its transactional risk insurance review.
