“Due to the scale and complexity of regulatory changes, non-life insurers are expected to allocate substantial capital and expertise to review existing practices, conduct gap assessments, and implement necessary changes,” said Yi Ding, associate director, AM Best. “Compliance-related costs are expected to remain elevated in the short term.”
Singapore: AM Best is maintaining a stable outlook on the New Zealand non-life insurance segment, citing in part ongoing regulatory reforms that are expected to strengthen market discipline and governance over the long term.
Whilst regulatory reforms can generally increase operational challenges and add cost pressures, AM Best expects that these measures around operational resilience, robust governance and improved consumer outcomes will strengthen the New Zealand non-life market’s resilience over the long term.
The latest regulation is the Contracts of Insurance Act 2024 that is expected to take effect in 12 months, with an aim toward promoting fairness and providing increased protection to policyholders. This includes fundamental changes to insurers’ remedies, claims handling and disclosure obligations.
“Due to the scale and complexity of regulatory changes, non-life insurers are expected to allocate substantial capital and expertise to review existing practices, conduct gap assessments, and implement necessary changes,” said Yi Ding, associate director, AM Best. “Compliance-related costs are expected to remain elevated in the short term.”
Stable or declining premium levels have been recorded by most companies in the non-life segment as competition remains fueled by a benign catastrophe environment and favorable conditions around reinsurance pricing. As extreme weather events remain an ongoing risk, insurers continue to carefully manage natural catastrophe exposure, which includes strengthening catastrophe modelling capabilities.
According to the report, New Zealand’s non-life insurance segment remains heavily dependent on international reinsurance capacity due to the country’s small market size and significant exposure to natural perils. This market remains attractive to global reinsurers due to the geographic diversification it provides.