Why Your Body Corporate Insurance Premium Increased in 2026

The Numbers Behind the Increases

If your body corporate insurance renewal arrived with a significantly higher premium, you are not alone. New Zealand's property insurance market has experienced sustained cost pressure since 2022, with multiple independent data sources confirming the scale of the increases.

Key data points from named sources:

These increases reflect a genuine shift in the underlying cost of risk — not simply insurer margin expansion. The four principal causes are explored below.

1. The 2023 North Island Weather Events

No single factor reshaped New Zealand's property insurance market more decisively than the two major weather events of early 2023.

Auckland Anniversary Weekend Floods (January 2023)

According to data from the Insurance Council of New Zealand (ICNZ), the Auckland Anniversary Weekend floods generated:

• 57,205 insurance claims
• $1.843 billion in insured losses

Cyclone Gabrielle (February 2023)

Cyclone Gabrielle, which caused widespread destruction across Hawke's Bay, Gisborne, and the Coromandel, produced:

• 55,607 insurance claims
• $1.657 billion in insured losses

The direct consequence for body corporate policyholders was that insurers updated their risk models, adjusted pricing for weather-related perils, and in some cases reduced capacity in flood-prone areas. Premiums at renewal after mid-2023 reflected these updated assessments.

2. Reinsurance Costs

Reinsurance is the insurance that insurers purchase to protect themselves against large losses. When global catastrophe losses rise, reinsurance prices increase — and those costs flow directly into the premiums charged to policyholders.

Global Context

The 2023 New Zealand weather events occurred against a backdrop of elevated global catastrophe losses. Reinsurers responded by tightening terms, reducing capacity in high-hazard zones, and increasing prices at the January 2023 and January 2024 renewal seasons — which are the key global reinsurance trading periods.

NHC Reinsurance Programme

The Natural Hazards Commission (NHC, formerly EQC) expanded its reinsurance programme to $10.3 billion for 2025 to ensure it can meet obligations after a major event. This expansion reflected both increased rebuild costs and the need to maintain confidence in the scheme's financial resilience.

3. Construction Cost Inflation

Insurance premiums are calculated as a percentage of the sum insured — the estimated cost to rebuild your building. As construction costs rise, so does the sum insured, and in turn the premium.

Cordell Construction Cost Index

The Cordell Construction Cost Index, a widely used benchmark for rebuild cost estimation, rose 6.2% in Q1 2025. This follows several years of elevated construction inflation driven by:

• Labour shortages across the building trades
• Supply chain disruptions affecting materials costs
• Increased compliance costs under the Building Act
• Elevated demand from post-cyclone rebuilds in Hawke's Bay and Gisborne

Higher rebuild costs mean that even if the insurance rate (the percentage of sum insured charged as premium) stays flat, the actual dollar premium increases simply because the base has grown. Body corporates experienced both effects simultaneously — higher rates and higher sums insured.

4. The Hard Insurance Market Cycle

Insurance markets move through cycles between "soft" conditions (competition, lower prices, broad appetite) and "hard" conditions (reduced capacity, higher prices, selective underwriting). New Zealand entered a hard market cycle in approximately 2022, intensified by the 2023 weather events.

Characteristics of a Hard Market

• Reduced insurer appetite: Some insurers withdrew from specific property types or regions
• Stricter underwriting: More detailed risk assessment at renewal, more questions asked
• Higher excess: Insurers pushing for higher excess levels to manage exposure
• Lower policy limits: Some insurers reducing maximum coverage offered
• Fewer quotes: Body corporates receiving fewer competitive options at renewal

The hard market affected body corporates disproportionately compared to standard residential policies, because multi-unit buildings represent concentrated risk — a single event can generate multiple simultaneous claims.

Signs of Relief in 2025

The good news is that there are genuine indications that the hardest part of the market cycle has passed.

Market Softening Signals

Gallagher NZ noted in a March 2025 market update: "For risks with a good claims record there are generally no longer premium increases at renewal." This is a material shift from the 2023–2024 environment where most risks faced increases regardless of claims history.

Insurer Profitability Recovering

Major insurer financial results for the year to December 2024 showed significant profit recovery:

• IAG Group (which underwrites several NZ property insurers): net profit up 91.2% year-on-year
• Suncorp: net profit up 89% year-on-year

The softening is uneven — body corporates in flood-prone areas or with recent claims may still face increases. But for well-managed properties in standard risk locations, the most acute pressure appears to be easing.

What Body Corporates Can Do

While some premium pressure is driven by market forces outside any individual body corporate's control, there are practical steps committees can take to manage their insurance costs.

At Renewal

• Review insurance annually — do not allow policies to auto-renew without a proper review of coverage and market options
• Get multiple quotes through a licensed adviser — accessing several insurer markets increases the chance of competitive pricing
• Ensure sum insured is accurate — both under-insurance and over-insurance carry costs; an accurate sum insured avoids paying premium on unnecessary cover

Managing Premium Levels

• Consider a higher excess to reduce premium — this transfers more risk to the body corporate, so ensure your long-term maintenance plan includes adequate reserves to fund the excess if required
• Address maintenance issues — deferred maintenance, blocked gutters, aging roofing, and outstanding repairs all increase your risk profile and can lead to higher premiums or coverage restrictions
• Document building improvements — upgrades to roofing, re-wiring, or fire suppression systems can support a better risk assessment

Working With Your Adviser

• Ask your adviser to explain each component of the premium increase at renewal
• Request a market comparison showing which insurers were approached and why the recommended option was selected
• Discuss excess options and their trade-offs in the context of your body corporate's financial reserves

Frequently Asked Questions

Sources

This article draws only on verified, named sources. No statistics have been estimated or fabricated.

• Insurance Council of New Zealand (ICNZ) — Claims data for Auckland Anniversary Weekend floods and Cyclone Gabrielle.
  icnz.org.nz
• Reserve Bank of New Zealand — May 2024 Financial Stability Report. Dwelling insurance price growth data (98% since 2015; 25% dwelling insurance inflation in 2024).
  rbnz.govt.nz
• Marsh NZ — Property insurance premium increase data (12–25% in 2023).
  marsh.com/nz
• Rothbury Insurance Brokers — Market Update. Insurance sector inflation 12.9% at September 2024 vs CPI 2.2%.
  rothbury.co.nz
• Gallagher NZ — March 2025 market update. Softening market commentary for risks with good claims records.
  ajg.com/nz
• Natural Hazards Commission (NHC) — 2025 reinsurance programme ($10.3 billion).
  naturalhazards.govt.nz
• Cordell Construction Cost Index — Q1 2025 construction cost inflation (6.2%).
  corelogic.co.nz