Commerce Commission Identifies Weak Competitive Pressure in Financial and Insurance Services

The New Zealand Commerce Commission has identified financial and insurance services as one of the sectors experiencing the weakest competitive pressure in the national economy. This finding follows the release of the inaugural State of Competition report on May 12, 2026, a 98-page assessment that provides an evidence-based analysis of market dynamics across New Zealand. Utilising 22 years of Stats NZ data spanning from 2001 to 2023, the report highlights a significant decline in business dynamism, making it increasingly difficult for new and smaller firms to challenge established incumbents in these critical sectors.

Declining Dynamism in Financial Sectors

The report reveals a complex economic picture where overall business concentration has generally reduced since 2001, with a notable acceleration of this trend following the Global Financial Crisis. However, this reduction in concentration has not translated into more vigorous competition. Instead, business dynamism has materially declined across the economy. This trend is defined by lower rates of business entry and exit, alongside a struggle for new entrants to gain early traction. Consequently, larger and more entrenched businesses continue to maintain their dominant market positions.

Weak competition in these critical 'upstream' sectors can lead to elevated costs and lower quality services for both businesses and households.

Commerce Commission Chair Dr. John Small noted that the decline in dynamism indicates a weakening of competitive pressure where established players are harder for newer businesses to displace. This environment is particularly evident in the financial and insurance industries, which the commission grouped with electricity, gas, water and waste services, information media and telecommunications, and mining as the four industries facing the least competition.

Impact on Consumers and Downstream Industries

Weak competition in 'upstream' industries like financial and insurance services creates a ripple effect across the economy, resulting in higher costs and lower-quality services for downstream businesses and households. In the insurance sector specifically, the cost burden on consumers has reached historic levels. House insurance premiums in New Zealand have increased by 916% since 2000. This rapid escalation has led to a significant shift in consumer behaviour; in 2025, 17% of respondents reported cancelling their insurance due to cost, a sharp increase from the 7% who did so in 2022.

The lack of competitive pressure often results in fewer innovative services and limited options for consumers. This overarching assessment builds upon previous focused investigations into the financial sector. On August 20, 2024, the New Zealand Commerce Commission published its final report on a market study into personal banking services, which found weak competition among the four largest banks: ANZ, , , and . Following that study, the government responded on , agreeing to 14 recommendations to enhance competition, including exploring capital-raising options for .