Tower Insurance chief executive Paul Johnston says New Zealand continuing to build in high-risk zones is one of his biggest concerns when it comes to the future of insurance in NZ.
“I think the key thing is that we do need to stop building in risky places. So that probably worries me the most that we will continue to build in risky places and exacerbate the risk that we face,” he said.
Johnston defines risky places as “high hazard areas” that are susceptible to floods, landslides, sea surges and earthquakes.
“We need to stop doing that as soon as possible and then we just need to continue to collaborate across the financial services industry with governments and officials and local councils as well to make us more resilient,” he said.
The Government is currently undertaking a six-month review into home insurance affordability and costs. Johnston told Interest.co.nz on Thursday after the general insurer posted its 2026 half-year financial results that Tower was “keen to play our part”.
“We are a business, so it’s important that we are talking to everybody across all sorts of different parties around resilience and adaptation and pushing for doing the right thing for New Zealand as much as possible,” Johnston said.
Growth battle
On Thursday, Tower reported an underlying net profit after tax (NPAT) of $36.8 million in the six months to March 2026. The result is 40% lower than the $61.7 million in NPAT Tower recorded in the same period a year ago.
Tower also posted an after-tax profit of $22.9 million for the six months ending March 2026 and the company’s board has declared a fully imputed interim dividend of 5 cents per share.
The general insurer’s customer base has risen by 5% or 15,000 compared to March 2025, with the number of Tower customers now sitting at 327,000. Customer growth was particularly strong in house policies – up 9% – alongside more moderate growth in motor and contents – up around 2%, according to Johnston.
'Working hard to attract low and very low risk customers'
According to Tower, over 90% of new house policies sold during the half-year were assessed by Tower as low or very low risk for flood, sea-surge and landslide.
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.
The insurer noted in its results that GWP growth had been “constrained” by lower average premiums, driven by growth in low-risk properties, which attract lower pricing and increased competition.
“We’ve been working hard to attract low and very low risk customers and that stat is a reflection of that work. And it's also the trend that we’ll continue to push as well,” Johnston told Interest.co.nz.
“It’s impacted GWP growth, but for good reasons.”
Asked if Tower was making its insurance competitors sweat, Johnston laughed.
“Well, I hope so,” he said. “We are the Kiwi insurer out there, we’re battling to grow and compete as hard as we possibly can. So hope so, is the answer.”
A key priority for Tower during the rest of the year is its new partnership with Westpac, alongside the referral of the Kiwibank back book. Together, these initiatives are expected to support customer growth and broaden Tower’s distribution channels, Johnston said.
It was Tower’s focus on risk-based pricing that caught Westpac’s attention, according to Johnston, after the bank issued a request for proposal seeking a strategic insurance partner in May 2025.
Westpac NZ then announced in September 2025 that it was ending its relationship with the country’s largest general insurer, IAG NZ, and was appointing Tower Insurance as its new underwriter for its house, contents, motor and landlord insurance products. The new partnership starts in July 2026.
“One of the things that Westpac particularly loved about us is our transparency with our customers around that risk-based pricing, the risk to households from an insurance hazard point of view and then turning that into a price premium,” Johnston said.
“Westpac’s always been very interested in that and we’re keen to talk to everybody about it as much as possible,” he said.
Wild, wild weather
Johnston said historically, Tower had always been “front-loaded” with wild weather events in the first half of the year during cyclone season, as that was when NZ tended to be hit by large summer storms.
Winter storms tended to sit in the business as usual (BAU) loss ratio, which is factored into the insurer’s full-year guidance, he said.
Tower has catastrophe reinsurance of up to $915 million for two events and an additional prepaid third event cover of up to $85 million for the full-year ending September 2026.
“We have our large events allowance of $45 million for the year. We have a reinsurance portfolio to support us and then operationally and through our digital technology, we're well set up to support customers when they claim,” Johnston told Interest.co.nz.
“We manage the business to be resilient no matter what the weather throws at us.”
Johnston said Tower’s net investment income for the six months to March 2026 was $5.1 million, $4.9 million lower than HY25.
“At this stage, the capital insolvency settings from a regulatory point of view as well, encourage conservative investment. And we are very happy with the conservative investment strategy because it minimises volatility for us as well through the cycle.
“While obviously at this stage of the cycle, our returns are not as large as they have been in other phases, the conservative nature of the strategy has also minimised those losses too,” Johnston said.
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