24 Oct 2019
Posted in Insurance
New Zealand’s general insurance market to reach US$7.8bn by 2023, says GlobalData
High susceptibility to natural hazards combined with rise in residential and infrastructure construction is expected to drive New Zealand’s general insurance market from NZD8.4bn (US$5.8bn) in 2018 to NZD10.9bn (US$7.8bn) in 2023, according to GlobalData, a leading data and analytics company.
General insurance is the major contributor to the growth of the overall insurance industry. The segment’s share as a percentage of total industry is on an increasing trend. It grew from 76.0% in 2014 to 80.2% in 2018, and is expected to reach 81.4% in 2023.
GlobalData’s report, ‘New Zealand General Insurance – Key Trends and Opportunities to 2023’ reveals that gross written premium in the New Zealand’s general insurance market registered a compound annual growth rate of 10.3% during 2014–2018.
Property, motor, and personal accident and health insurance were the major growth drivers, collectively accounting for 91.8% share in 2018. Property insurance was the largest sub-segment, with a 42.2% share of GWP in 2018.
Tapas Bhowmik, Project Manager in Insurance division at GlobalData, comments: “Investments in the construction of residential buildings drove growth in property insurance. The government, through the KiwiBuild Program, plans to invest NZD2.0bn (US$1.5bn) during 2018–2020.”
Natural disasters remain a key risk factor to contend with. The Insurance Council of New Zealand reported an insured loss of NZD468.9m (US$323.8m) during 2017–2018 due to natural hazards.
Insurers are using new risk-based pricing models for underwriting, thus shifting away from the conventional products. At the same time many others are reviewing their existing underwriting processes for high-risk areas. For instance, IAG, Vero and Tower insurance company announced plans to discontinue underwriting new policies in the high-risk areas.
Beyond underwriting, insurers are also deploying technology across the value chain for efficiency. The country’s high Internet penetration enables significant scope for online product offerings. Tower Insurance, for instance, provides an option to purchase insurance policies online.
Emerging tools such as those in artificial intelligence (AI) are also being considered. For instance, Digital Squad, an Internet marketing organization, developed a machine learning AI to help insurers manage claims processes.
Bhowmik concludes: “Insurers’ focus on digitalization to transform business processes and cater to evolving customer needs will propel the growth of general insurance business in New Zealand.”