Tower chair say Government levies and taxes are ‘adding significant cost and complexity’ to insurance premiums as the insurer reports ‘constrained’ gross written premium growth

Tower's chairwoman Naomi Ballantyne says the Government’s review into home insurance affordability and costs is a “critical conversation” for New Zealand.

Earlier this year, Finance Minister Nicola Willis and Commerce and Consumer Affairs Minister Scott Simpson directed the Council of Financial Regulators and government agencies to work with the insurance sector to look at household insurance affordability and the drivers behind residential insurance pricing. 

Ballantyne said on Thursday that the long-term accessibility and affordability of insurance “ultimately depends on addressing the root causes of risk.” To achieve this, the Government and councils need to invest in resilience infrastructure, flood protection, stronger building standards and more disciplined land-use planning, she said.

Government levies and taxes account for 43% of an insurance premium and Ballantyne said the “cumulative impact of regulation – though well-intentioned – adds significant cost and complexity.” 

“Clear prioritisation and greater coordination across regulators and government would help manage these pressures more effectively,” she said.

Earlier this year a Treasury report, released under the Official Information Act, noted significant increases in residential insurance premiums over recent years - with premiums rising three times more than CPI (consumers price index) inflation since 2011.

Ballantyne’s comments followed the share market listed insurer reporting an underlying net profit after tax (NPAT) of $36.8 million in the six months to March 2026 on Thursday. The result is 40% lower than the $61.7 million in NPAT Tower recorded in the same period a year ago.

Tower said its latest financial result was delivered in a “more challenging” operating environment, which was impacted by pricing pressure, higher weather-related claims activity and global volatility. The insurer does not expect these economic conditions to improve in the second half.

Tower posted an after-tax profit of $22.9 million for the six months ending March 2026, the company's lowest after-tax profit since it reported a $5.1 million loss in 2023 when catastrophic weather events impacted the insurer’s profits. 

The insurer reported an after-tax profit of $49.7 million in the corresponding period in 2025 and an after-tax profit of $36 million in the half-year to March 2024.

Customer numbers rise

Tower CEO Paul Johnston said the general insurer’s customer base increased by 15,000 compared to a year earlier, with Tower’s customer base now sitting at 327,000.

He said Tower continued to experience strong growth in the insurer’s house policies, which grew 9%, despite a “subdued” economic environment, which Johnston attributed to competitive pricing.

“Competitive pricing is supporting customer affordability and growth, while our expanded risk-based pricing is strengthening portfolio quality and reducing exposure to weather-related impacts,” he said.

Tower made $300 million from gross written premiums (GWP) in the six months to March 2026, up 1% from a year earlier. GWP is the total amount of money customers are required to pay for insurance coverage on policies issued by an insurer.

Tower said GWP growth had been “constrained” by lower average premiums, driven by growth in low-risk properties, which attract lower pricing and increased competition. 

“This was partially offset by increased policy volumes,” the insurer said. “Over 90% of new house policies sold during the half were assessed by Tower as low or very low risk for flood, sea-surge and landslide - reflecting the expansion of Tower’s risk-based pricing in 2025.”

Tower’s GWP forecast for the full-year financial period ending September 2026 is now expected to grow by “low single digits,” down from the previously projected 5% to 10% range. This was due to “subdued” market conditions and lower average premiums, the insurer said.

Tower expects underlying earnings for the full year to September 2026 to be in the range of $55 million to $65 million, which assumes full utilisation of the insurer’s $45 million large event allowance. 

Wellington’s flooding event in April 2026 will be recorded as a large event in the second half of the year, with an estimated cost of $5 million, Tower said.

“Approximately $21.5 million of the large event allowance remains available for the balance of FY26. Any unused portion at year end (after tax) will contribute to underlying NPAT.”

The company’s board has declared a fully imputed interim dividend of 5 cents per share.