IAG New Zealand reported a 22.9% drop in insurance profit for its 2026 financial year, which the country's largest insurer says was due to the weakening New Zealand dollar, cost-of-living pressures and a challenging commercial environment.
Its insurance profit was A$467 million, or NZ$563 million, a fall of NZ$167.5 million from last year’s insurance profit of NZ$730.4 million.
According to IAG NZ chief executive Phil Gibson, insurance premiums were affected as New Zealanders continue to struggle with cost of living pressures.
“During this period, many customers received premium reductions, and many more experienced a significant levelling-off in premium increases as inflationary pressures moderated,” Gibson says.
Annual inflation, as measured by Statistics New Zealand’s Consumers Price Index (CPI), increased to 4.1% in the June quarter. It’s the highest rate of annual inflation recorded in NZ since the end of 2023. Insurance premiums have increased three times more than CPI inflation since 2011 and risen by over 40% in the past two years, according to Treasury earlier this year.
Since 2000, the price of house insurance alone has also increased 916%. Consumer advocacy organisation Consumer NZ says it is the biggest price rise for goods monitored by the CPI over the past 25 years.
IAG NZ trades under the AMI, State, NZI, Lumley and Lantern brands. It also provides general insurance products sold by ASB, BNZ and The Co-operative Bank.
Around one in two NZ households have a policy with IAG NZ, with 1.7 million customers across the country. IAG NZ says 80,000 new customers came on board in the 2026 financial year.
The company is the country’s largest insurer and insured NZ$1.07 trillion in assets during the 2026 financial year. It received more than half a million worth of claims and paid out NZ$2.24 billion.
This is slightly higher than the NZ$2.17 billion that IAG NZ paid out for the over half a million claims it received in the 2025 financial year.
Its Gross Written Premium (GWP), the total amount of money customers are required to pay for insurance coverage on policies issued by an insurer, fell 8.0% or $253 million to A$3.504 billion.
In local currency terms, IAG NZ’s GWP edged down by 2.7% to NZ$4.060 billion.
The general insurer’s annual report says IAG NZ’s GWP was “significantly impacted” by a weakening NZ dollar and a softer commercial market.
But the result still reflected “continued discipline” in IAG NZ’s intermediated business and “solid growth and momentum” in the insurer’s direct home and motor portfolios, according to the report.
IAG NZ reported an insurance margin of 22.8% for its 2026 financial year, a fall of 4.6% from 27.4% in the 2025 financial year.
The company’s underlying insurance trading ratio (UITR) rose to 20.6% for the year ending June from 20.1% a year earlier. IAG NZ says the UITR rise was driven by an improved underlying loss ratio despite the impact of lower earned premium due to challenging commercial market conditions.
Insurers use a UITR to measure core operating profitability. The ratio determines how much profit is made from the insurer’s core business for every dollar of premium it earns. A higher UITR is a sign an insurer is generating stronger profit margins compared to the premium revenue it collects.
According to IAG NZ, the 2026 financial results reflected natural disaster-related costs being lower than anticipated, coming in A$19 million (NZ$22.9 million) under allowance.
IAG NZ responded to 44 severe weather events across the country in its 2026 financial year.
“Although wild weather and natural hazard events during the past twelve months were relatively less impactful than in other years, we know our country remains highly exposed to these risks,” Gibson says.
“IAG has a critical role to play in New Zealand’s economic resilience and is focused on helping the country better understand risk and take practical steps to reduce it. Our education and advocacy efforts across the year have prompted an increasingly urgent focus for national action on risk reduction.”
The general insurer called on the Government again in June to put forward a long-term road map on how to strengthen the country's ability to reduce natural hazard risk. It has proposed a possible 15-year roadmap option.
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