Tower grows first-event catastrophe reinsurance limit to NZ $970m at reduced cost

Tower Insurance, the Auckland, New Zealand-headquartered general insurer, has capitalised on favourable reinsurance market conditions to expand its catastrophe coverage again, buying first-event limit of up to NZ $970 million at its renewal, while experiencing improved pricing for the second year in a row.

Last year, Tower secured first-event catastrophe reinsurance limit of $915 million, which the company said was going to cost it a reinsurance premium expense of 10.6% of Gross Written Premium, down from 13.3% in the prior year.

At the fiscal year 2027 reinsurance renewal the costs have come down further, while Tower has also adjusted how it arranges a third event cover.

For the new catastrophe reinsurance tower, the insurer estimates a cost of 9.5% of premium as savings continue to be made thanks to global reinsurance market price conditions.

The reinsurance renewal will cover Tower across its FY 27, ending September 30th 2027, protecting its home, motor,
boat, and commercial insurance portfolios across New Zealand and Pacific markets.

With now $970 million of reinsurance coverage for a single large catastrophe event, the company has secured this with unchanged attachments of just $20 million.

The catastrophe reinsurance arrangements again feature pre-paid reinstatements for two large loss events, while Tower has adjusted its third event arrangements to improve their structure and increase the limit available to $100 million, up from $85 million last year.

That third catastrophe limit of cover is now pre-agreed, rather than pre-paid, payable after the first two events have occurred.

Tower CEO Paul Johnston said favourable reinsurance market conditions, the insurer’s strong business performance and its expansion to cover additional perils in recent years, have all contributed to reduced costs for the FY 27 catastrophe reinsurance purchase.

He explained, “Our disciplined approach to risk selection, pricing and portfolio management has helped us secure a strong outcome for our FY27 reinsurance arrangements, supporting Tower’s ongoing resilience and ability to offer competitive pricing for customers.”

The insurer also said its has strengthened its reinsurer relationships, with additional markets committing to multi-year agreements at this renewal, which help to provide greater certainty around reinsurance pricing and catastrophe retentions and costs.

Read all of our reinsurance renewal news coverage.