16 Jun 2021
Posted in Insurance
General insurance industry in New Zealand to reach US$5.9bn in 2025, says GlobalData
The general insurance industry in New Zealand, in terms of gross written premiums, is projected to grow from NZ$6.9bn (US$4.6 bn) in 2020 to NZ$8.4bn (US$5.9 bn) in 2025, according to GlobalData, a leading data and analytics company.
GlobalData has revised New Zealand’s insurance forecast in the aftermath of COVID-19 outbreak. As per the latest data, the general insurance market is expected to expand by 3% in 2021 as compared to 1.1% growth in 2020, primarily due to the economic recovery.
Amrita Sheela, Insurance Analyst at GlobalData, comments: “New Zealand’s economy is poised to grow at 4.8% in 2021. Large-scale public sector investments in infrastructure, welfare and climate change related reforms will fuel country’s economic growth, which will support the general insurance industry.”
Property insurance, which accounted for 55% of general insurance business in 2020, is projected to grow at a compounded annual growth rate (CAGR) of 3.42% between 2020 and 2025, aided by increased government funding of large infrastructure projects and public housing plans through the Housing Acceleration Fund. This is expected to increase home ownership and bolster demand for home insurance. Additionally, increasing use of risk-based pricing, especially in regions prone to natural disasters, and resultant premium inflation will further support premium growth.
Motor insurance accounted for 33% of general insurance business in 2020. The growth rate in this category declined from 7.5% in 2019 to 1.6% in 2020 due to lock-down restrictions and economic impact of COVID-19. The current economic recovery signals the resurgence in motor insurance industry.
As per the Motor Industry Association of New Zealand, new vehicle registrations increased by year-on-year 62% in the first four months of 2021, supplemented by demand from both passenger and commercial vehicle segments. This will help the growth in motor insurance premium, which is forecasted to grow by 3.3% in 2021
Liability insurance, which accounted for 9% of general insurance business, is projected to expand by 6.9% in 2021. Due to heightened uncertainty, liability insurers are likely to be more selective in risks they underwrite. This is expected to drive up liability insurance policy rate in the short term.
Ms Sheela concludes: “New Zealand’s economic revival is currently sustained by fiscal stimulus and strong government policies which helped curb the spread of the pandemic. Rapid COVID-19 immunization will support this growth and play a critical role in the full and sustainable recovery of the country’s insurance industry.”