New Zealand’s biggest general insurer made NZ$563 million from insurance in the year to the end of June, almost 23 percent less than the year before, while telling customers that the run of steep premium increases has eased.
IAG New Zealand owns AMI, State, NZI, Lumley and Lantern, and also underwrites house and car policies sold through ASB, BNZ and Westpac. It says it covers about one in two New Zealand households. The figures were released on 13 August as part of the full year result of its Australian parent, Insurance Australia Group, which is listed on both the ASX and the NZX.
Insurance profit for the New Zealand business fell from NZ$730.4 million to NZ$563 million, a drop of 22.9 percent. Gross written premium, the total value of premiums the company charged, slipped 2.7 percent or $113 million to $4.06 billion. The reported insurance margin, which measures how much of each premium dollar ends up as profit, fell from 27.4 percent to 22.8 percent. Stripping out one-off items, the underlying margin actually edged up from 20.1 percent to 20.6 percent.
The fall was not caused by customers walking away. The retail brands added 80,000 customers over the year, taking the group to about 1.7 million across its five brands. The pressure came from the other half of the business. NZI, which sells commercial and personal cover through insurance brokers, saw gross written premium fall 11 percent in local currency, and its insurance profit dropped from NZ$246 million to NZ$170 million.
Chief executive Phil Gibson told interest.co.nz he had seen a commercial insurance market this soft only four times in a 30 year career. “Prices go down, premiums go down, they go down for everybody,” he said. Commercial insurance runs in long cycles. When global reinsurers have capital to spare and losses have been light, competition pushes prices down for businesses buying cover, and insurer margins go with them.
For households, the more interesting number is what happened to premiums. Gibson said roughly a third of IAG customers received a reduction in their premium over the financial year. He put that down to more precise pricing rather than a general discount. “We’re really getting better instead of pricing for the community, pricing to your actual address,” he said.
That approach cuts both ways. Pricing to the address means a home on a hill away from a flood plain and away from a known fault line can pay less than the neighbourhood average. It also means a home on a river flat or a soft coastal section pays more, and some owners in the worst exposed streets have found cover harder to get at any price. The industry calls it risk based pricing. It is fairer in the narrow sense that each property pays for its own risk, and harsher for anyone who bought a house before that risk was mapped.
In the results announcement, Gibson said “Many customers received premium reductions, and many more experienced a significant levelling-off in premium increases as inflationary pressures moderated.” Building costs, imported car parts and reinsurance rates all pushed premiums sharply higher through 2023 and 2024, and all three have since settled.
A levelling off still leaves premiums at a high base. Treasury advice to Cabinet earlier this year found insurance prices have risen three times faster than general inflation since 2011, and more than 40 percent in the past two years alone. The Reserve Bank’s May 2026 Financial Stability Report put the average annual premium for a standalone house policy at around $2,900, and estimated about 60,000 New Zealand homes now carry no insurance at all.
Asked whether the country is heading into an insurance affordability crisis, Gibson said it was in IAG’s own interest to keep cover within reach of as many people as possible. “I absolutely don’t want insurance to become unaffordable,” he said. An insurer with half the market has an obvious commercial reason to say so. Every household that drops cover is a customer lost, and a large enough pool of uninsured homes eventually becomes a problem for banks holding the mortgages over them.
The weather was comparatively kind over the year. IAG managed 44 severe weather events in New Zealand, and its natural disaster costs came in A$19 million under the allowance it had set aside. The company notes the country now averages a storm roughly every eight days. Gibson was careful not to read too much into one mild year. “Although wild weather and natural hazard events during the past twelve months were relatively less impactful than in other years, we know our country remains highly exposed to these risks,” he said.
Across the year the insurer paid out NZ$2.24 billion on more than 500,000 claims, and says it now has about $1.07 trillion of New Zealand assets on its books.
The result lands in the middle of a government look at the same problem. In February, Cabinet asked the Council of Financial Regulators to assess household insurance affordability, alongside an initial market study by the Commerce Commission, with findings due back to the Minister of Commerce and Consumer Affairs in the middle of this year. The questions on the table are what has driven the increases, what they are doing to households, and whether there is anything a government can usefully do about a price set largely by global reinsurance markets and local geology.
For the parent company the year was harder than the New Zealand numbers suggest. Group net profit after tax fell from A$1,359 million to A$1,022 million, largely because the previous year had been flattered by a one-off provision release and an unusually quiet storm season on both sides of the Tasman. IAG shares fell sharply on the day the result was announced.
Have your premiums gone up or down this year, and has your insurer explained why? Tell us what you are seeing in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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