Tower's board is backing the increased takeover bid from Suncorp Group-owned Vero Insurance New Zealand, provided the $236 million offer wins approval from local regulators.

The Auckland-based insurer has signed a scheme implementation agreement with ASX-listed Suncorp, where local subsidiary Vero, will pay $1.40 a share to buy the NZX-listed general insurer.

The deal, which trumped an earlier merger proposal from Canada's Fairfax Financial Holdings at $1.17 a share, valuing Tower at $197.3m, is subject to the merger getting antitrust approval from the Commerce Commission.

That regulator decision was expected to be wrapped up by the end of the week, but Tower chairman Michael Stiassny said the deadline is likely to be pushed out into July.

"After careful consideration, taking into account relevant factors and advice from Goldman Sachs and Chapman Tripp, Tower considers the Vero SIA is a superior proposal to the existing Fairfax scheme," Mr Stiassny said in a statement.

"Fairfax has advised that it will not increase its offer price," he said.

The price represents just over 77 percent premium to Tower's closing share price on February 8th.

The transaction also needs Reserve Bank and Pacific Island regulatory approvals.