“If market environments change dramatically, then we might need to reflect that in pricing. But at this stage, we’re absolutely not seeing any signs of that just yet.”

Also speaking to the Herald, Tower’s new chairwoman, Naomi Ballantyne, made the point that it was hard to foresee what the net effect of several moving parts could be on insurance premiums.

For example, Tower might not be stung too hard by a construction cost spike if this happened when the weather was good and there was little need to repair damaged homes.

Or, if the conflict worsened to the point that the Government had to ration fuel, people would drive less, and Tower’s accident-related claims costs could fall.

Johnston also noted the global reinsurance market remained soft.

There was a lot of capital looking for a home, and reinsurers had priced in the rise in claims costs experienced around the globe lately.

According to Stats NZ’s Consumers Price Index, the price of dwelling insurance rose by only 0.4% between the March quarters of 2025 and 2026.

Premium inflation fell after it spiked to 25% between the March 2023 and 2024 quarters, on the back of Cyclone Gabrielle.

The price of contents insurance rose by 2.1% between the March 2025 and 2026 quarters. Meanwhile, the price of car insurance fell by 2%.

The price of health insurance, which operates in a completely different market to general insurance, has been rising steadily for some time, hitting 20.5% in the March quarter.

In February, the Government directed the Reserve Bank, Treasury, Commerce Commission, Financial Markets Authority, and Ministry of Business, Innovation and Employment to spend six months reviewing insurance affordability.

“What they will discover is insurance as an industry is not ripping people off with super profits; that we are all constrained by competition, what people can afford to pay,” Ballantyne said.

“It’s a difficult industry, but it’s a business. It’s not a social enterprise.”

Ballantyne said it was important for insurers to remain profitable, and she cautioned the Government against responding to the findings of its review by interfering in the market, which is dominated by Australian giants IAG and Suncorp, with Tower accounting for about 10% of the market.

She believed markets functioned inefficiently if Governments intervened too much, and said there were examples offshore of this creating coverage gaps and lifting premiums.

Ballantyne said the Government should focus on how it could help people adapt to the effects of climate change.

Indeed, insurers have for some time been speaking out against local authorities consenting building in flood-prone areas.

Johnston talked up how transparent Tower was with its pricing, giving homeowners a breakdown of how exposed their properties were to earthquake, flood, slip and sea surge risk, and tying this to their premiums.

He said the insurer wasn’t looking to add another peril to the list of risks it considered when pricing premiums.

Rather, it was looking at new ways of pricing premiums according to usage. For example, charging less to insure a rarely used car, parked in a garage.

Johnston said Tower hadn’t pulled out of any parts of the country deemed too risky.

“We just price for it,” he said.

Ballantyne said it was a “fallacy” to think Tower was profiteering by pricing out high-risk customers, noting that without some high-risk customers, it couldn’t charge high premiums.

This said, she conceded, Tower’s approach “might mean that people at the high-risk end can find cheaper options with other companies that are not doing risk-based pricing in the same way that we are. But it is transparent”.

Johnston said Tower didn’t have a firm view on how the Natural Hazards Commission (NHC), formerly known as the Earthquake Commission, should evolve in terms of its funding and coverage.

The levies the commission collects from those with home insurance are insufficient to cover its expected claims costs (before its reinsurance cover kicks in), leaving the Government on the line to pick up the tab in the event of a big disaster.

However, given there is little political appetite for hiking levies when the cost of living is already high, the Government has decided to figure out what to do with the NHC after its industry review is completed.

The comment Tower did share was its concern that NHC levies were flat, countering its approach somewhat to price insurance based on risk.

Johnston was also broadly comfortable with the amount of capital the Reserve Bank required insurers to hold to prevent them from collapsing.

The Reserve Bank is reviewing its insurance capital requirements.

Last year, it did so for the banking sector, which argued its regulator was being too conservative with its rules at the expense of its customers.

Johnston said Tower wouldn’t push for major changes to insurance capital requirements.

“New Zealand strengthened its solvency rules post-Christchurch earthquakes for a good reason,” he said

He recognised there was always room to improve the regulatory environment, but believed Reserve Bank stress testing suggested the existing rules “weren’t too far off the mark”.

“It’s important that we do have strong solvency rules.”

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.