Carriers
Tower Insurance lifts first-event cat reinsurance limit to NZ $970m as costs fall again
By Insurance Wire Staff, . Insurance Wire.
Tower Insurance has renewed its catastrophe reinsurance programme for fiscal year 2027 at better terms than the year before, according to Artemis, which reported the renewal in full. The Auckland-headquartered general insurer has increased its first-event catastrophe limit to NZ $970 million, up from NZ $915 million at the prior renewal, while cutting its estimated reinsurance cost to 9.5% of gross written premium from 10.6% the year before. The year before that, the cost stood at 13.3%, meaning Tower has shed nearly four percentage points of reinsurance expense in two years.
The programme covers Tower's property, motor, boat and commercial portfolios across New Zealand and its Pacific operations through to September 30, 2027. Attachments remain unchanged at NZ $20 million, meaning Tower retains the first NZ $20 million of any single catastrophe loss before reinsurance responds.
The structure includes reinstatements that are pre-paid across two major loss events, a feature retained from the prior year. The more notable change is in how Tower has arranged its third-event cover. That layer now provides NZ $100 million of limit, up from NZ $85 million previously, and has shifted from a pre-paid basis to a pre-agreed basis, meaning it becomes payable after the first two events have been exhausted rather than being funded upfront. Artemis noted that Tower described this as an improvement to the structure.
Tower chief executive Paul Johnston attributed the outcome to three factors: favourable global reinsurance market conditions, the insurer's own business performance, and its expansion into additional perils in recent years. Johnston was quoted by Artemis as saying: "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."
Artemis also reported that Tower has built stronger ties with its reinsurers, with further markets signing up to multi-year deals at the renewal. Multi-year deals reduce the uncertainty around pricing and retention levels at future renewals, which matters for a carrier operating in a region exposed to earthquake, cyclone and flood risk.
The broader implication is worth noting. Tower's experience over two consecutive renewals reflects a reinsurance market that has moved meaningfully in buyers' favour after the hard-market conditions of 2022 and 2023. A cedant in a high-catastrophe-risk jurisdiction securing more limit at lower cost, with multi-year commitments from additional markets, suggests reinsurer appetite for well-managed Pacific risk remains strong. Whether that holds if a major New Zealand event occurs before the programme expires is the question that will define the next renewal conversation.
What is not yet public is the identity of the reinsurers participating in the programme or the specific perils added in recent years that Tower says contributed to the improved terms. Those details would give a clearer picture of how broadly the market is supporting this programme and whether the pricing improvement is Tower-specific or part of a wider regional trend.
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