TRANSPORT TALKS: Insurance Market Trends - Implications for the Transport Sector

The New Zealand insurance market is undergoing significant evolution, shaped by economic pressures, climate change, regulatory shifts, and technological advancement. These developments are particularly relevant for the transport sector, which is directly impacted by rising risk profiles, operational disruptions, and increased regulation.

MARKET CONTEXT AND CHALLENGES FOR TRANSPORT

General insurance premiums have risen by an average of 10% over the past year, largely due to inflation, increasing asset values, and growing reinsurance costs. For transport businesses, this has translated into higher costs for insuring vehicles, cargo, infrastructure, and liability exposures. Natural disasters and weather volatility had led to significant insurance claims thinking back to Cyclone Gabrielle, Auckland Anniversary floods and more recently the Banks Peninsula, Selwyn District and Canterbury floods. This has resulted in tightened underwriting standards, especially for motor fleets and goods-in-transit cover, where route exposure and geographic location are now key pricing factors. With the subsiding of nationwide natural disasters over the past 18 months, transport operators now have an opportunity to secure cover at sustainable and competitive pricing.

KEY TRENDS AFFECTING THE TRANSPORT SECTOR

1. Climate risk and infrastructure exposure Increasing climate risk has placed pressure on insurers to assess transport infrastructure more rigorously. Road and rail systems, depots, and ports in flood-prone or coastal areas are facing higher premiums or exclusions. Transport operators reliant on vulnerable infrastructure need to plan for increased weather-related disruption and reassess their insurance strategies accordingly.

2. Cost control and claims efficiency With rising operational costs across fuel, labour, and compliance, transport companies are also facing increased insurance expenses. Insurers, in response, are streamlining claims processes through automation and telematics. Fleet operators are now expected to adopt vehicle tracking, driver behaviour analytics, and maintenance logs to support claims and reduce premiums.

3. Technology and fleet innovation Insurers are showing strong interest in technology-driven transport solutions, including electric vehicles (EVs), connected fleets, and autonomous systems. While these innovations promise improved safety and lower emissions, they also present new insurance challenges such as uncertain repair costs, limited loss history, and cybersecurity concerns. Insurers are adjusting underwriting models to include such emerging risks and offering usage-based pricing models that reflect actual vehicle use and risk.

4. Regulatory and ESG (environmental, social, government) pressures Regulatory changes are tightening around emissions reporting, sustainability, and vehicle safety standards. The New Zealand government and Reserve Bank are pressing for greater disclosure of climate-related risks, including within the transport sector. Large logistics and freight firms are expected to align with ESG frameworks, and insurers are beginning to assess ESG performance when pricing policies or offering capacity.

5. Labour and liability risks Workforce-related liabilities are also rising in prominence. Health and safety obligations under the Health and Safety at Work Act are being interpreted more stringently, and transport leaders (such as directors and fleet managers), are now at increased risk of personal liability. Insurance products like Directors & Officers (D&O) liability and statutory liability are evolving to reflect these shifts, with closer scrutiny of safety protocols and compliance frameworks.

STRATEGIC CONSIDERATIONS FOR TRANSPORT OPERATORS

To navigate the changing insurance landscape, transport businesses should:

• Proactively engage with specialist brokers to tailor policies to evolving operational models.

• Invest in fleet technology (e.g. telematics, EVs) not only for efficiency but also to gain favourable insurance terms.

• Enhance risk management practices—documented safety programs and training can influence underwriter confidence.

• Prepare for climate-related disruptions through business continuity planning and infrastructure resilience strategies.

• Monitor regulatory developments in insurance and transport law, including any changes to coverage for emerging technologies and ESG obligations.

LOOKING AHEAD

For the New Zealand transport sector, insurance is no longer a passive cost— it is a strategic tool for resilience. By anticipating market shifts and aligning business practices with insurer expectations, transport operators can better manage costs, safeguard assets, and remain competitive in a complex and evolving risk environment.