Tower Insurance says Government levies and taxes now make up 43 cents of every dollar in a home insurance premium — and are calling for a root-cause conversation about what is making insurance unaffordable for many New Zealand households.
The question of why household insurance premiums in New Zealand have been rising faster than almost anything else in the consumer price index is not new. But the data behind it keeps getting more specific.
Tower Insurance chairwoman Naomi Ballantyne told shareholders this week that Government levies and taxes now account for 43 percent of an insurance premium — a figure that means nearly half of what a household pays for insurance goes to the Government rather than the insurer's claims costs. The comment was made as Tower reported a 40 percent drop in half-year profit, and as the Government continues a review into residential insurance affordability.
The numbers behind the premium
A Treasury report released earlier this year under the Official Information Act documented what many households have felt directly: residential insurance premiums have risen three times more than consumer price index inflation since 2011. That is not a recent development — it is a sustained, multi-year trend that has pushed insurance from a relatively manageable line item to a significant cost pressure for many households, particularly those in higher-risk areas.
Ballantyne said the Government's current review into insurance affordability is a "critical conversation" for New Zealand, but she was clear that levies alone are not the root cause. The long-term answer, she argued, requires addressing the underlying risk — which means investing in resilience infrastructure, flood protection, stronger building standards, and more disciplined land-use planning. Premiums reflect risk, and until the physical risk is reduced, premiums will continue to reflect it.
Tower's result and what it signals
Tower reported an underlying net profit after tax of $36.8 million for the six months to March 2026, down 40 percent from the same period a year earlier. Its after-tax profit of $22.9 million was the lowest since 2022, when catastrophic weather events hit the insurer's balance sheet particularly hard.
The broader operating environment was described as challenging — marked by pricing pressure in the sector, higher weather-related claims activity, and global volatility. Tower does not expect conditions to improve in the second half of the financial year. Despite the profit fall, the insurer added 15,000 customers, bringing its total base to 327,000.
Why this matters for households
Insurance is one of those costs where the connection between what you pay and what you get is not always visible. When a claim is paid, the policy works. But when premiums rise faster than inflation and faster than wages, the practical effect is that households either absorb the cost or reduce coverage — neither of which is a good outcome if a major weather event occurs.
The 43 percent Government levy share is a structural feature of how insurance pricing works in New Zealand, but it is not the only driver. Climate risk is real, and properties in flood-prone or high-risk areas carry higher physical risk that shows up in higher premiums. The policy question is whether the system is managing those risks in a way that keeps insurance accessible for people who are not high-risk but are paying for those who are.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.