New Zealand property and casualty (P&C) insurers will receive an earnings boost from rate rises in personal and commercial lines, according to S&P Global Ratings.

Price growth in the home and motor lines is likely to be sustained.

“In recent years the underwriting performance of New Zealand’s P&C insurers has been reasonable in the face of frequent catastrophes,” the ratings agency says.

“We believe New Zealand’s P&C market will continue to post solid underlying results over the next year, underpinned by a sound economy, which should support good premium growth at the retail level, and some degree of further upward movement in prices for commercial lines of business.”

Commercial lines will be partly lifted by premium rises in property-related covers following last November’s Kaikoura earthquake.

S&P says reinsurers remain committed to the market.

“Despite the number of natural hazard events in recent years, we see no indications reinsurers are looking to exit the region, with primary insurers continuing to benefit from ample capacity at favourable pricing and terms and conditions due to the continuing soft state of the global reinsurance market,” S&P says.

Proposals to reform the Earthquake Commission (EQC) will be mildly positive for insurers.

“Under the initiative, policyholders will claim first with their private insurer, rather than the EQC, and we believe this should assist in improving the transparency and efficiency of the claims process,” S&P says.

The EQC will also stop providing residential household contents cover, which should “increase the market size and therefore growth opportunities” for private insurers.

A draft EQC reform bill is expected later this year or early next year, with changes most likely to be implemented in 2020.