Why Health Insurance Premiums Are Rising So Fast in New Zealand

For the past year and a bit, the question I am asked more than any other is what to do about the premium increase.

Let me put the answer up front: your health insurance did not jump because you chose the wrong insurer. Medical costs and claim payouts have risen right across New Zealand, so every insurer has moved by a similar amount. Do not cancel and go without. Restructure the policy first — there is usually more room in it than people expect.

How much, exactly

Base premium increases in the 2024/25 round (Smiths Insurance, citing Aynsley & Associates industry data, June 2025):

And that is only the base increase. Health premiums are priced in age bands, so crossing into a new band adds another step on top. Some families have seen their total annual premium rise by more than half.

Why: surgery, diagnostics, hospital stays and drugs are all getting more expensive

• Medical inflation in New Zealand jumped from 7.4% in 2024 to 14.5% in 2025, one of the fastest-rising markets in the Asia-Pacific region (AIA New Zealand figures, via Insurance Business, December 2025). Aon’s forecast for New Zealand’s 2026 medical cost trend is 18%.
• Claims are climbing steeply. Southern Cross paid out $1.71 billion in the 2025 financial year, with claim volumes up 16% and payouts equal to 94% of premiums, producing a $57 million loss on its health insurance business (LifeDirect, on Southern Cross’s 2025 annual report). UniMed’s claim volumes rose 53% in a year.
• Public waiting lists are pushing people into private care. Between January and March 2026, only 64.9% of people received elective treatment within four months (RNZ). Everyone who cannot wait is using their insurance to go private, and insurer payouts rise accordingly.

Insurers are not charities. If they pay out more, they charge more. It is also why nib added a 20% co-payment on specialist and diagnostic costs for some policies in November 2025 (nib’s explanation).

The people hit hardest are older

Clients in their fifties and sixties tell me the same thing: over $300 a month, getting close to $400, is genuinely hard to sustain — but going without feels reckless when a serious illness is exactly what you are insuring against. Keep paying and the pressure is real. Stop paying and there is no safety net.

What to do instead of cancelling

I strongly advise against cancelling because of a price rise. Once you cancel you are exposed, and one serious illness undoes years of planning. Worse, by the time you are older and have some health history, you often cannot buy the cover back at all.

What you can do is restructure, especially on a policy that has not been reviewed for a few years:

1. Raise the surgical and hospital excess. This is the most direct lever. On some products a $500 excess buys around a 25% discount, and most people do not have surgery or a hospital admission in a given year. Here is exactly when an excess is triggered.
2. Cut add-ons you rarely use. Dental and optical are everyday allowance benefits with low reimbursement leverage for adults. It comes down to how much you actually use them — here is where the line falls.
3. Rethink what the family core needs actually are. What is it you are most afraid of? Spend the money there and leave the rest to the public system. That is the point of who to insure first.
4. Consider covering only the risk that would really hurt. When comprehensive health cover is genuinely unaffordable, cancer-only cover is a rational trade-off: roughly a third of the premium, and it generally does not exclude conditions like high blood pressure or diabetes. Who it suits.

If your policy has not been reviewed in two or three years, or you are staring at a renewal notice wondering whether to cancel — don’t do anything yet. Send it to me and let’s go through it before you decide.

Want your policy restructured before you decide? Get in touch with Cornerstone Insurance.

Phone: +64 211 280 727 Email: amy.tao@cornerstonefs.co.nz WeChat: Amytaoingrace