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Tower Insurance readies its next risk-based pricing tool as CEO says he loves being the insurance underdog competing with bigger Aussie-owned rivals

Insurance / news
Tower Insurance readies its next risk-based pricing tool as CEO says he loves being the insurance underdog competing with bigger Aussie-owned rivals
Tower CEO Blair Turnbull and CFO Paul Johnston
Tower CFO Paul Johnston and CEO Blair Turnbull

Michael Stiassny, the chairman of Tower Insurance, says New Zealand’s banks are “missing in action” when it comes to taking steps to mitigate climate risks in their financial frameworks.

“[They are] seemingly reluctant to actively embed climate-related risks in their business operations and risk management frameworks, but nevertheless content to continue making record profits,” he said in an analyst and investor call about Tower’s half-year results on Tuesday.

Stiassny said the Reserve Bank (RBNZ) had called on insurers “and more notably the banks” to take action in its recent Financial Stability Report which was published in April. The central bank raised concerns around insurance availability and risk-based pricing.

“I look forward to seeing how the banks choose to respond to RBNZ’s challenge because insurers can’t – and shouldn’t – be shouldering the burden alone,” Stiassny told the analysts call.

Tower chief executive Blair Turnbull told after the briefing that while insurers had to play a lead role, climate change was a “team sport”.

“We need councils, government, insurance industry and the banking industry to all be actively involved in helping ensure that we don't build in places that are prone to weather events and that we do support homes in that area to ensure that they do get some levels of protection going forward,” he said.

“The key point there is, again, climate change is a team sport. All parties need to be involved to help manage this.”

Tower netted $36.6 million in underlying net profit after tax (NPAT) for the six months ended March 31 – a turnaround from the $3.7 million loss the insurer experienced in its first-half of 2023. 

It’s more than the “greater than $35 million” guidance the general insurer gave the share market back in mid-April for the whole 2024 financial year.

Chief financial officer Paul Johnston told on Tuesday that the company was being cautious in its full-year profit estimates in case of a catastrophe event in the insurer’s second half.

The general insurer has $45 million set aside to be used for any catastrophic disasters in the rest of the 2024 financial year which will then be added to Tower’s full-year underlying net profit if it doesn’t get used up. 

Turnbull said 2023 had been “ incredibly unique [and] unprecedented in the level of weather events,” and described it as “unusual” that so far this year there had been no large catastrophe events at all.

“We are appropriately conservative. We're not looking for a large event, but we will provide allowance for it. But if it's not used, it’ll go back into underlying performance,” Turnbull said.


Alongside a boom in its underlying net profit, gross written premiums (GWP) also soared 20% to $291 million for Tower in its first-half result. 

Questioned in the analysts call on if Tower’s GWP growth would continue into the second half, Turnbull said Tower expected to see that growth settle between 10% and 15% in the full 2024 financial year. 

He added that the insurer also expects to see similar premium growth between the 10% and 15% benchmark going into the 2025 and 2026 financial years as well. 

“We want the right risk, right price. Risk based pricing is at the heart of everything we do,” he said. “And as we look forward, we see those insurance premium increases start to level up a little bit and we'll be very competitive in the risks that we want to target.”

Tower also plans to continue its risk-based pricing tools for customers, which began in 2021 with the release of its flood risk assessment tool.

Turnbull said a landslide and coastal hazards tool will be accessible to customers this side of Christmas.

“At the moment we do it through our underwriting,” he said. “But we do want to automate that so that all customers can see that.”

Tower said on Tuesday morning that its management expense ratio (MER) had shrunk from 36% in the prior year to 32.2% in the six months to March 31.

Turnbull said the insurer’s business as usual (BAU) claims ratio was at 49.7% compared to 51.1% the 2023 first-half period and the ratio was “back within target range”.

Although Tower’s GWP has risen $46 million in the six months to March 31 compared to the same period in 2023, its insurer competitors are outstripping Tower by the billions when it comes to premium growth.

Suncorp NZ reported its GWP was up by almost 20% to $1.4 billion while IAG NZ reported its GWP climbing 18.8% to over $2 billion. 

Despite being up against some hefty Australian-owned general insurance competition, Turnbull told Tower believed it could be the “leading provider of insurance”.

“We've got a unique footprint between New Zealand and the Pacific and we've invested very heavily in technology, digitisation and data and we think those areas are shining through and that's come through our recent results.” 

However, he added: “We love being the underdog. It’s kind of our personality.” 

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Some houses will become worthless....



Banks only care for their short-term profits.


If anything happens to those properties they made so much profits from they could write them off & get some of that government insurance payouts.


The problem is , for example, that crazy development in Napier…

If the insurance companies don't like the flood risk, and the banks don't like the climate risk etc, should it even go ahead?

I think the councils need to take a stronger view on the risks here....


And the other problem is that being honest about flood risk will mean they have a % of loan book that is possibly at risk, and that no one will insure......   so if you start being honest about new builds then... where will the honesty stop???


A comment by Kate last year.

by Kate | 12th May 23, 11:15pm

About to write another article for about the implications of section 72 caveats
(hazard caveats under the Building Act) being placed on land titles as (my anecdotal understanding is)
developers find it (i.e., encouraging their clients to accept them) as
the only means/way for much of the new development (and upgrades to existing dwellings) to get RMA consents.  
This situation isn't serving anyone fairly - and particularly not the land owners.  
But it does get council's off-the-hook with respect to future liability.

What a mess.  

My comment

Why should the Councils care? Not their problem if its un-insurable. They still collect rates.

It indicates a change in legislation is required which Labour had  six years to sort out and I can't see National lifting a finger. The more houses they can point to built on their watch the better.



The only time you can discover what you are actually insured for is when you lodge a claim. Up until then you give, and the insurer takes the premiums, a process about which they are as smooth as silk. But any claimant that has experienced the feted deny, delay, dispute mantra will know that that the process is akin to stirring cold molasses with a knitting needle. Insurers are insincere to express  concern about the potential liabilities of their individual clients circumstances and situation, including the ill defined causes and disputable affects of climate change, because  quite simply every unrecognised factor, every ambiguous complication offers a loophole they can exploit in the event of a claim.