Is there enough competition in New Zealand’s general insurance market? The country’s two biggest general insurers, with the majority of the market, say yes

They dominate the country’s general insurance market but the bosses of IAG New Zealand and Suncorp New Zealand insist the market is still competitive.

The general insurance giants recently posted their annual financial results, featuring combined gross written premium (GWP)  of almost $7 billion during the 2024 June-year. GWP is the total amount of money customers are required to pay for insurance coverage on policies issued by an insurer. 

IAG is the largest general insurer in NZ and Australia, operating the AMI, State, NZI, NAC, Lumley and Lantern brands in NZ. It also provides general insurance offered through ASB, BNZ, Westpac and The Co-operative Bank.

Suncorp is the second largest general insurer across Australia and NZ and has the Vero Insurance brand and the joint venture AA Insurance business in NZ. Suncorp used to also own Asteron Life but announced the sale of the life insurer earlier this year. 

Together, IAG NZ and Suncorp NZ hold the majority of NZ’s general insurance market – and that isn’t looking like it's going to change anytime soon.

'Still competitive'

However, both companies believe there’s still enough competition in the market and told interest.co.nz as much last week.

Following IAG NZ’s full-year results, Chief Executive Amanda Whiting told interest.co.nz she knew the general insurance market is still competitive as IAG NZ has to “work really hard” in order to retain its customers and business. 

“But the other reason I know this is because an indication of competitiveness for me is how our organisations are innovating,” she said.

IAG has started using AI tools to quickly identify vehicle damage, which Whiting said simplifies the process for customers and reduces costs. The insurer has also established repair hubs to improve customer service and achieve further cost savings.

“We've invested heavily in our technology and that just helps us be a little bit more nimble so that when there are other insurers out there offering different products, we can too. And so those things kind of indicate to me that it's a pretty competitive market,” she said.

'Yes there is enough competition'

During an interview over Suncorp NZ’s annual results, Suncorp NZ’s Chief Executive Jimmy Higgins pointed to the Commerce Commission blocking the Suncorp-owed Vero from buying Tower Insurance as a reference point of why NZ’s general insurance market was still a competitive environment. 

Vero tried to buy Tower in 2017 but the Commerce Commission refused to greenlight the takeover due to competition concerns. Vero then sold its 19.9% stake in Tower to American private investment firm Bain Capital.  

“There are certain barriers to entry in being an underwriter in New Zealand and capital requirements set by the Reserve Bank are one of them. But you know, we’ve got a lot of brokers in New Zealand and we obviously manufacture the product and it's sold through the various broker channels and corporate partners,” Higgins said.

“So the distribution network in New Zealand is quite broad and I do think it is competitive because we do see that and what we have seen certainly more recently is foreign capital coming into New Zealand backing underwriters that can afford more so in the corporate world than in the consumer world.”

Higgins said this meant local companies like Suncorp would sometimes lose customers, but it was cyclical and Suncorp would often see those customers come back after a few years.

“So I would say yes there is enough competition,” he said.

Asked if Suncorp NZ is likely to become NZ's largest insurer in the near future or will continue to be the second biggest, Higgins said it was a question of if the general insurer wanted to be first.

“While it’s a question of whether we want to be number one, you know the thing about that is you could just buy risk at any price to get your market share,” Higgins told interest.co.nz

“But that would be financially and economically irresponsible, let alone socially irresponsible. We need to continually prove social licence operating and that means that when we attract new customers we have to be able to provide a price point that is reasonable. But more importantly we have to be able to service that. We have to be able to respond to that when it comes claim time.”

The numbers

Suncorp NZ’s annual GWP rose 17.3% to $2.8 billion. In 2023 it rose 14.3% to $2.4 billion.

IAG NZ’s GWP jumped 15% to NZ$4.12 billion in the same 2024 financial period. This is up from 2023, when annual GWP grew by 12% to NZ$3.58 billion. Premiums rose 7% in the 2022 financial year.

Premiums have been rising at a brisk clip in recent years with insurers citing elevated reinsurance costs and more climate risks and hazards as key reasons behind the jump in premium costs. 

Suncorp NZ paid out $1.21 billion in claims during the 2024 financial year while IAG NZ paid out $2.8 billion.

Suncorp NZ’s insurance profit came to $230 million, double what it reported in its full 2023 financial results.

IAG NZ reported an insurance profit of $500.7 million. That's an increase of around $452.5 million from the $48.2 million insurance profit reported in its 2023 annual results.

Suncorp NZ covers approximately 850,000 households and $590 billion of assets across NZ while IAG NZ has $1 trillion worth of assets and around 2 million customers.

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