Given Tower Insurance pulled out of commercial farming insurance in New Zealand from February 2024, how can we keep the market sustainable and insurance affordable for Kiwi farmers?

When Tower Insurance announced in November 2023 that it would be pulling out of commercial farm insurance in New Zealand, it suggested that a hard market was about to become even harder for New Zealand farmers. 

From February 2024, Tower will refer commercial farm clients to AonAgri New Zealand as their policies expire, in a move described by Tower executives as a strategic shift to streamline the business and focus on direct personal and small business lines insurance.

It’s no secret that the farm insurance market is facing difficult times, with Asia Insurance Review labelling New Zealand’s current agriculture reinsurance market as “perhaps the toughest it has been in many years”. Losses from extreme weather events, supply chain shortages and the increased cost of building materials have driven insurance prices sky high.

However, it’s not all bad news.

Jess Hunt, general manager of AonAgri New Zealand, says farm insurance is sustainable as long as it is accompanied by a shift in thinking. 

“Aotearoa New Zealand will continue to be susceptible to weather events,” she says. 

“Mindsets need to shift to assessing what a worst-case scenario might look like, to ensure adequate insurance and risk-management arrangements are made, rather than a traditional approach of thinking insurance should be there to cover everything.”

Currently, Hunt says insurers are far more receptive to clients who are willing to take a higher excess and self-manage smaller claims. This also helps keep premiums at a more affordable level, while ensuring a sustainable balance between risk retention and risk transfer remains.

Cover is still available for most eventualities, she adds. But a move towards risk-based pricing and reductions in policy coverage in certain areas indicate a “significant shift in insurer risk appetite”.

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