General insurers in New Zealand are likely to record higher gross written premium (GWP) in the next few years, supported by the economy’s post-COVID bounce, according to analytics and consulting firm GlobalData.

GlobalData says the New Zealand general insurance market is projected to expand by 3% this year, faster than the 1.1% growth recorded last year.

GWP last year reached $NZ6.9 billion ($6.4 billion) and should increase to $NZ8.4 billion ($7.8 billion) in 2025.

“New Zealand’s economy is poised to grow at 4.8% in 2021,” Insurance Analyst Amrita Sheela said.

“Large-scale public sector investments in infrastructure, welfare and climate change related reforms will fuel the country’s economic growth, which will support the general insurance industry.”

Property insurance, which accounted for 55% of general insurance business last year, is projected to grow at a compounded annual growth rate 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,” GlobalData said.

“Additionally, increasing use of risk-based pricing, especially in regions prone to natural disasters, and resultant premium inflation will further support premium growth.”

Liability insurance, which makes up 9% of the general insurance market, is likely to expand by 6.9% this year.

GlobalData says due to heightened uncertainty, liability insurers will be more selective in the risks they underwrite. This is expected to drive up liability insurance policy rate in the short term.

Motor insurance premium growth slowed to 1.6% last year from 7.5% in 2019 due partly to the COVID-lockdowns. It is however expected to grow 3.3% this year as the economy recovers strongly from the pandemic disruption, according to GlobalData.

GlobalData says motor made up 33% of the market last year.