Budget 2026: Key points for IBANZ insurance brokers

Today, the Government unveiled Budget 2026. The Government’s overarching goals can be summarised as; the delivery of core services (healthcare, education, law and order), keeping tight control of discretionary spending, addressing New Zealand’s longer-term productivity challenges and developing a sustainable pipeline of infrastructure projects.

This update focuses on the Budget announcements most relevant to IBANZ members and their clients.

The New Zealand Economy and Budget 2026 at a glance

• Forecast a return to surplus in 2028/2029.
• Debt to continue a downward trend with a long-term objective of getting Crown expenses down to 30% of GDP.
• Annual average growth forecasted to rise.
• Budget 2026 net operating expenditure is $2.1bn ($300m less than December 2025 allowance).
• Budget 2026 net capital expenditure is $5.7bn (from $3.5bn previously).
• Treasury forecasting employment to grow by 220,000 and wage growth to average 3.1 per cent.

The impact on brokers and their clients

Budget 2026 may impact broker businesses and their clients. The IBANZ team have analysed Budget 2026, providing insights on the changes most relevant to our members.

Financial sector to fund regulation through new levy

The Government has announced a new prudential levy targeting banks, non-bank deposit takers, insurers and certain other financial institutions to fund the cost of prudential regulation and supervision.

While insurance brokers are not directly subject to prudential supervision in the same way as insurers or deposit takers, the industry should keep a watchful eye. As insurers absorb the new levy, there is potential for some regulatory costs to flow through the value chain with ultimately affects premiums.

The approach aligns New Zealand with jurisdictions such as Australia and the United Kingdom, where regulated entities contribute to the cost of oversight, and is consistent with existing levies applied by other domestic financial regulators.

The levy is expected to raise approximately $209 million over the forecast period. It will be paid to the Reserve Bank, with funds returned to the Government via an increased dividend.

The Reserve Bank will begin consultation with industry participants following the Budget. Cabinet is aiming to finalise decisions in early 2027, with implementation targeted for mid-2027.

Financial sector to fund regulation through new levy: Implications for brokers:

• Insurance affordability: premiums may see some increases depending on the result of the upcoming consultation with industry; and
• Brokers advisory role: brokers may need to proactively explain any pricing changes and demonstrate value in navigating evolving market conditions.

Natural hazards and climate change

Budget 2026 allocates $400m to strengthen state highway resilience, helping keep key routes open during severe weather. Building on New Zealand’s first National Flood Map, the announcement will also see upgrades to emergency management systems to enable faster, more coordinated responses.

The package includes funding for the Natural Hazards Commission to prepare a detailed business case for a Crown public infrastructure risk management scheme. This scheme aims to strengthen the Crown’s understanding of its exposure to potential losses and improve how risks to public infrastructure are assessed and managed. It will support decisions on the most effective combination of insurance, self-insurance, and resilience investments, helping ensure better long-term value and more efficient preparedness for and response to future events.

Ahead of Budget 2026, the Government has confirmed it will pause any planned increases to the Natural Hazard Levy. The move comes amid growing concern about rising insurance costs for households and businesses.

As part of its response, the Government has also commissioned a market assessment to better understand the key factors driving insurance pricing in New Zealand. The review will be conducted by the Commerce Commission, with its report expected in August 2026.

The findings are intended to inform future policy decisions and ensure that insurance remains accessible and affordable while maintaining adequate coverage for natural disaster risks.

In 2025, Treasury recommended that the levy rate be increased from 16 cents to 24 cents per $100 of NHI cover. This would increase the maximum annual levy paid per dwelling from $554 to $828 (GST inclusive).

From an IBANZ perspective, there are concerns that setting the Natural Hazard Levy too high could reduce insurance affordability and limit coverage uptake. IBANZ is advocating for a phased approach to any levy increases over time, rather than sudden changes that could impact customers. We would also like to see the Government investigate alternative long-term funding and financing options for the levy.

Natural hazards and climate change: Implications for brokers:

• Affordability pressures remain front of mind as clients are likely to remain sensitive to premium costs;
• Heightened client engagement is likely as public and Government focus on insurance affordability, creating opportunities to reinforce broker value through advice and risk mitigation; and
• Brokers should prepare clients for potential future levy increases and stay informed so they can adjust advice as needed.

Gas Transition Loan Guarantee Scheme

A key pre-budget announcement is the Gas Transition Loan Guarantee Scheme, aimed at supporting businesses to reduce or eliminate their reliance on gas.

The scheme will underwrite up to $1.2 billion in lending, with individual businesses able to access loans of up to $50 million to fund eligible transition projects.

Under the programme, the Government will guarantee 80% of each loan, enabling participating banks to offer more favourable interest rates to borrowers. For insurance brokers, this signals increased client activity in capital investment, operational change, and associated risk profiles.

To qualify, businesses must demonstrate genuine gas reduction of at least 15%, while maintaining or increasing production levels. This requirement ensures the initiative supports both economic growth and job retention, rather than simple cost-cutting measures.

The scheme will be available for a three-year application window, with loans typically structured for repayment within up to 10 years, depending on lender terms.

Gas Transition Loan Guarantee Scheme: Implications for brokers:

• Increased project risk advisory needs as clients invest in new technologies or energy systems;
• Policy reviews and updates may be required to reflect changing operational exposures; and
• Opportunities to support clients with risk mitigation strategies tied to transition projects.

Fire and Emergency New Zealand

Fire and Emergency New Zealand will receive additional funding alongside Corrections, Police, Customs and Education to maintain frontline operational activities in the face of sustained fuel price increases.

Health cyber security

Following increased cyber risk, the government set aside $153.6 million for Health New Zealand to strengthen it’s cyber security as well as an additional $300 million to replace existing aging digital infrastructure. Together this will protect patient information and support frontline services for safe and secure care.

IBANZ members recognise the importance of cyber security and cyber insurance, and are well placed to continue building their expertise to better support clients in this area.

View Budget 2026

You can view the full details of the Budget via the New Zealand Treasury website. 

View the budget