New Zealand’s Tower has lowered its earnings guidance after above-average house claims in recent months.

Large house claims now number 97, worth around $NZ21.3 million ($20.62 million), Tower says. That compares with 56 worth $NZ10.4 million ($10.07 million) a year earlier.

Underlying net profit for the year to September 30 is now forecast to be $NZ19- 21 million ($18.39-20.32 million), down from an earlier given range of $NZ22-24 million ($21.29-23.23 million).

Tower says its large house claims are above long-term averages, particularly over the last quarter which included four total loss fires in the past week.

“Operational improvements and growth strategies at Tower remain on track,” the insurer said.

Tower, which will give full earnings details on November 24, says industry-wide inflation is a “continuing source of pressure” on both motor and house claims after a 14% rise in the value of second-hand vehicles and almost 5% in the cost of house materials in the June quarter due to supply-chain constraints.

Tower has taken rating and underwriting action to address this, strengthened its claims management processes and is working with its supply chain, though it will take time for these measures to flow through to its financial performance.

New Zealand’s current COVID lockdown had not fully offset the inflationary impact, it said, and only partially alleviated claims costs.