Tower CEO Blair Turnbull says the insurer wants to be competitive and affordable with its pricing – as gross written premium jumps 21% in four months

There are three things that keep Tower’s chief executive awake at night: insurance affordability, competitive premiums – and the weather.

“I feel I should have been a meteorologist in a previous life,” Tower Chief Executive Blair Turnbull tells Interest.co.nz after the insurer’s annual meeting on Wednesday.

“Weather keeps me awake at night – it keeps us all awake at night.”

Based in Auckland, Turnbull has appreciated the long hot summer that the city of sails has experienced this year more than most. 

This time last year Tower was staring down the barrel of the damage left behind by the Auckland Floods and then the destruction that Cyclone Gabrielle caused across the North Island and parts of Vanuatu where Tower also has customers.

A year later and at Tower’s annual meeting on Wednesday, Turnbull told attendees 92% of the 9,400 claims received from these events had been settled. 

“For the most part, the remaining customer claims are the most complex – some have an Earthquake Commission (EQC) element, while others may also be impacted by various Council buy-out schemes,” he says.

Reflecting on the last year in an interview with Interest.co.nz after the meeting and if it had been in-line with the insurer’s expectations, Turnbull says “it could always go better”.

“We want to get through those claims as quickly as we possibly can. And at 92% where we are today, we're very pleased with that. But clearly we've got more work to do.”

Turnbull announced at Tower’s meeting that the insurer had achieved $194 million in gross written premium growth in the first four months of its 2024 financial year – up 21% on the same period last year. 

Tower attributed the premium jump to rating adjustments to offset inflation, and increasing reinsurance and claims costs, “along with good organic growth”.

He tells Interest.co.nz that the insurer needs to remain competitive.

“We're differentiated because we've got a very clear strategy to be the best direct insurer down under and so that's where we focus – 97% of all of our policies are direct to the consumer, he says.

“The key thing for me, if I take a step back, is that New Zealanders have choice. Competition is good and I think that's important. I think that's the role that Tower plays. We're the last listed Kiwi insurer and we're certainly very clear about being competitive and offering Kiwis choice.”

Despite the gross written premium growth, Turnbull says he’s most concerned about insurance affordability for customers.  

“The last thing Tower wants is to see customers struggle to afford cover, the right level of cover or worse still, lapse their policy.”

Turnbull said in his AGM speech that as inflation settles, Tower expects overall premium increases to “level off” near the second half of the year.

He couldn’t give Interest.co.nz a percentage figure of how much by, as his “crystal ball didn’t work so well last year,” but says the insurer watches and monitors pricing daily.

“Last year we did over 100 tactical pricing changes. So as we see inflation starting to level and soften, we will adjust immediately. We want to be competitive on our pricing,” he says.

“So look, it's what I can promise to our customers. As soon as we see trends, we will price them competitively.”

Weak indicators

Besides the 21% jump in gross written premium, Tower has also seen an “elevation” of large house claims in the first four months of the 2024 financial year which Turnbull says the insurer will “monitor closely” for any emerging trends.

They’ve already got some weak indicators – Turnbull says particularly homes that are around about 60 years of age seem to be having larger fire events. 

“We're investigating with some very specialist assessors to understand if there's something in there that we can identify. And of course, if we do identify something, we'd share it very clearly with our customers and share it more broadly because we don't want homes to burn down.”

He says they’ve been a number in Christchurch and a few more recently in Auckland, but it wasn’t clear to Tower that there was a geographic trend.

“But what we are seeing is homes, often bungalows around that 60 year old age, have had a weak signal of higher levels of fire incidents. So we're investigating that.”

Assuming full utilisation of the large events allowance, Tower is anticipating underlying net profit after tax for the full 2024 financial year to be at the upper end of, or exceed, its guidance of between $22 million and $27 million.