Insurer Tower’s strategy to reduce exposure to flood-prone homes pays dividends, shareholders told
Wednesday, 18 February 2026
Insurer Tower’s strategy to reduce its exposure to flood-prone homes is paying dividends, shareholders were told on Wednesday.
As parts of the country including Christchurch and Lower Hutt recover from flooding, Tower released speaking notes for its annual shareholder meeting.
But the good news for shareholders was coupled with a “chilly’ lesson on the reality of climate change, with the insurer’s chairman saying New Zealand was moving too slowly on policy to save lives.
In the speaking notes released to the NZX, chief executive Paul Johnston said Tower’s risk‑based pricing strategy had reduced its exposure, with the expected average annual loss from flood, landslide, and sea‑surge hazards down 20% on a per‑policy basis, and 14% overall compared to a year ago.
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Extra insurance premiums for the worst flood-prone homes hit $4500-a-year.
Tower sparked an insurance-industry wide move towards greater risk-based pricing on homes in 2018, when it began moves to charge higher premiums to owners of homes at higher risk of natural disasters.
This resulted in some of those homeowners shifting to rival insurers IAG ‒ which owns the State, NZI and AMI brands ‒ and Vero, which owns the AA Insurance brand, though those insurers responded with similar pricing strategies.
It also enabled the insurer to drop premiums in some years for owners of lower-risk homes, which has won it an increased market share.
“During the opening months of FY26, we have achieved continued strong growth in house policies, and premium growth,” said Johnston.
Tower's New Zealand policy numbers increased by 5%, largely driven by growth in house and contents policies, and total customer numbers rose by 12,000 year‑on‑year to 323,000 at the end of January.
The insurer has been a relatively strong performer for shareholders.
In the past two years its shares have increased in value from 66 cents to $1.82, however, chairman Michael Stiassny told shareholders: “It continually frustrates me that our share price does not reflect our success.”
Stiassny treated shareholders to a lesson in the “chilly reality” of climate change.
“Climate change is here, and it’s costing lives and money,” he said.
“In recent years we have had multiple wake-up calls and yet while at a national level some progress has been made to address the impacts of extreme weather events, it has been haphazard, inadequate and painfully slow.”
He did not believe since the loss of life in the 2023 flooding in Hawke’s Bay and Auckland that anyone could honestly say that decisive action had been taken to prevent future loss of life in similar events.
Stiassny said insurers had the data to know exact risks to every property in the country, and yet a national risk register covering every property still did not exist.
Such a register should exist, and should be everyone’s “single source of truth”, he said.
Even with its lower exposure to flood-prone homes, Tower had taken a hit from recent extreme weather events.
Johnston said Tower had a $45 million large events “allowance” in its current financial year for large events.
“This includes the October wind storm, the Timaru hailstorm in November, and the late January nationwide storm,” he said.
And, he said: “Claims from the stormy weather across New Zealand over the past few days are still being assessed and at this early stage, Tower expects costs to exceed its $2m large events threshold. Tower has $32.9m available for the remaining eight months of the financial year.”
Johnston signalled a future growth track thanks to deals to sell insurance to Westpac and Kiwibank customers.