We must trade climate statements for real progress – outgoing Tower chair

2026-02-19 - 03:46

It has been an exceptional year for Tower and its shareholders, but sadly this is my last ASM as Chair. A shareholder stopped me on the street recently and called me a traitor – Are you jumping ship after a stellar year because the future is bad? he asked. No. I am going because I have been here for 12 years and the FMA, NZX, NZSA, RBNZ and proxy managers would simply make a song and dance, questioning my independence moving forward. And that would be detrimental for you and me as shareholders – something I do not wish to happen. Tower has been in turn around mode from its lowest point after the Christchurch earthquakes until today. I must just say it took a bit longer than I would have liked. But our hard fought and long running transformation has come of age with our FY25 results demonstrating a business delivering value today while continuing to prudently build for tomorrow. Following FY24’s result, we returned $45 million of capital to shareholders and then we declared total dividends for FY25 of 24.5 cents per share. This highlights two things: Firstly, both I and the Tower Board firmly believe that shareholders must benefit from the company’s success – a principle that, sadly, is often forgotten by many public company boards. Secondly, it demonstrates Tower’s commitment to delivering consistent returns, supported by sustainable profit growth and a robust capital and solvency position. It continually frustrates me that our share price does not reflect our success. It should. And as shareholders, we all deserve to benefit from it. However, before we get too carried away, we must all recognise that our FY25 dividend reflects an underlying profit considerably boosted by the under-utilisation of our $50 million large events allowance. While we have benefitted from this for the past two years, this situation won’t last forever. One day we will have significant large events once again – it’s just a matter of time. To counter this inevitability, our focus remains on controllable factors such as investing in our digital platform, maintaining disciplined underwriting, innovating products and leveraging technology and data to drive performance. Our goal is to continue building a business that is resilient, customer-focused, and well-prepared for the future. Tower has led the market with initiatives like announcing address-level risk-based pricing, enabling lower premiums for low-risk customers while managing exposure effectively. Strategic partnerships with Trade Me, Kiwibank and from mid-year Westpac, along with our refreshed brand campaign, position us well for the future. At the same time, we are investing in innovation, technology and AI to enhance efficiency, improve customer experiences and ensure Tower remains competitive in a rapidly evolving market. While we celebrate these achievements, in the wake of the tragic events at Mount Maunganui, Papamoa and Warkworth, we face a chilling reality. Climate change is here, and it’s costing lives and money. 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. Look back three years to the devastation wrought by Cyclone Gabrielle and the Auckland floods. Can we honestly say that in the intervening period we have seen decisive action that will prevent loss of life? Are we confident that we are no longer building on flood plains or on vulnerable coastlines nationwide? Are we confident that we have active flood prevention measures in place that will protect against more frequent and severe rain events? Are we confident that our infrastructure is resilient and will cope with large storms that are no longer anomalies? The answer is a resounding no. Along with others, Tower has been sounding the alarm for years because insurers are in a unique position and with that comes a unique responsibility. Insurers are not just observers of climate change; we are enablers of resilience. As I have banged on for years, every insurance company has access to the exact same data we do. The industry as a whole knows – on a granular level – the specific risks each home and property faces. Central and local Government also have access to this exact same data. They keep talking about a central register – well, it’s overdue. We must reach the point, immediately, where that information becomes the bible, the single source of truth. Yes, it will mean Tower loses its competitive edge as the only insurer that shares risk information directly with customers which, to be frank, was always going to happen. But then we won’t be competing on data – we’ll be competing on service, on price, on all the things that come down to how well we engage with the customer. And as management knows, the key to a successful company is the customer, the customer, the customer. How well Tower looks after them is what will drive our success. Some of you probably never thought I would be a climate change crusader – but here I am. It’s here, it’s real – it’s not some woke issue, of which there are plenty! – and it’s not simply an environmental issue. Climate change is a financial issue. And, the problem I personally have – and where I part ways with the do-gooders – is how do we actually deal with it? As it’s my last day, I can actually say a few things that come to mind so I’m actually going to go off piste here and cover one thing that really annoys me. Tower spends far too much time and money on climate statements and everything that comes with it. Is the world a better place because all of you can find out how many hybrid cars we use or how many the panel beater in Eketāhuna uses? It makes no difference to climate change. To make real progress on climate change, do we need to focus on the world’s biggest emitters, who keep giving us the finger when it comes to climate change, or should we actually tackle the largest emitters being airline and ship fuel. Unfortunately, no one seems willing to act on what could achieve far more: helping people move away from places already being hit, and that will be hit even harder by climate change. I simply don’t believe that climate statements move the needle or cut the mustard. Here’s something revealing that I read recently. The Financial Markets Authority has indicative data showing that if New Zealand adopted Australia’s new climate reporting thresholds, currently being phased in, only 11 of our existing 164 climate reporting entities would still be required to disclose. The contrast is striking. And, while we all have to be grateful that the upcoming increase in New Zealand’s market capitalisation reporting threshold – from NZ$60 million to NZ$1 billion in March – will reduce the number of reporting entities to around 76, we have to ask ... is that a sufficient reduction? Do we have the right balance? My view remains, no. Finally, the Government has recently announced an insurance affordability review. It’s framed up differently but to all intents and purposes echoes the banking and supermarket inquiries that left many New Zealanders wondering how much change would ultimately follow. Tower is co-operating with the review. But let’s be very clear, when comparing FY24 to FY25, Tower’s average sum of contents insured increased by between 1 and 1.5 percent, while the average premium dropped by 6 to 8 percent. The average premium renewal for Motor experienced sizable reductions in 2025, peaking at a 14 percent reduction during the year. And while average house premiums peaked at a 4 percent increase at the beginning of FY25, they have fallen steadily and dropped into negative territory since September. The rate of premium increase is either on par with the sum insured increase or much lower. In short, premiums have not climbed as much as some ministers have said. The real issue when it comes to insurance affordability is the cost of living more generally for Kiwis. With costs of all goods and services spiralling up significantly more than incomes, it is inevitable that some people are unable to afford insurance. That is the issue that needs to be addressed. And let’s not forget FENZ and Natural Hazards Insurance levies make up roughly 40 percent to 43 percent of insurance premiums ... over which we have no control. In closing, I want to acknowledge all the Tower team past and present. My tenure as Chair has been marked by working alongside a number of really talented, passionate people – I have enjoyed it and am immensely proud of what we’ve achieved together.