Insurance Premiums - why are they increasing so much?!
Charlene Overell (G3) | Thu Sep 25 2025
Many of us have insurance to protect us against the catastrophic events in our lives. We have policies that protect our house and contents against the elements, such as fires, flood and earthquake; then we have personal covers like life insurance, income protection and medical insurance. This article touches on the reasons for Medical insurance premiums increasing so much, between 20% to 40% in many cases!!
This is a ‘bitter pill to swallow’ when faced with such high increases, especially when the cost of living is already difficult for many. So why is this? And what can we do about it? We’ve collated some data and explanations from the health insurers.
- Age is one of several factors that contribute to increasing health insurance premiums, reflecting the value cover typically provides as we age
- Changes to the types of treatment we need as we age affect our premiums. The cost of treatments required by older people tend to be more expensive than those of younger people. The graphs below illustrate our changing needs for treatment. One is for men and the other for women, where both show the changes in treatments we require as we age.
The chart below, taken from claims nib clients have made, shows how premiums reflect older people increasingly making use of their cover. You’ll note the differences in claims costs for men vs women too.
Source: Nib – last updated August 2024
- Claims volumes have increased substantially. Nib stats shows that claims have increased by 67% over the last 5 years
- The number of claims being made per policy have increased too. Whilst this means policy holders are getting greater value from their cover, it does drive up the cost of servicing claims for the insurerÂ
- Cost of claims – the dollar value of the claims being processed by the insurers have also been rising. In the year ending 30 June 2024, Nib saw an increase of 15% in the dollar value of claims processed, with the cost of claims being up a huge 76% in the five years from 2020. Medical inflation (which is the increasing cost of medical procedures over time), costs of treatment across the healthcare sector, and rising salaries within the medical profession, have all contributed to the increases we’re experiencingÂ
So, what can we do to review our premiums and cover?
- Remind yourself of the reasons you took out health insurance in the first place and if these are still relevant today
- Whilst some health insurance policies only provide cover for Pharmac listed drugs, others provide both Pharmac and Medsafe drugs, giving us peace of mind. So again, check out what’s important to you and what your cover provides
- Ensure you know what benefits your cover provides, and what you can claim for
- Look at alternative excesses and how increasing your excess may reduce your premiums. A higher excess makes sense as we age, however, remember that you need to have access to funds to pay this excess
- If you have ‘add-on’ benefits, like Specialist & Tests, Dental, GP – do you need these? Or can you fund these yourself? Getting a quote from the insurer if you were to remove these can be helpful for you to revisit how important, or not, these add-ons are to you, versus the extra premium cost of including these
- Being aware of what the cost of treatments are these days, can help you put into perspective the cost of your premium versus you choosing to pay for these yourself privately. Many of us do not have access to spare cash to fund the cost of expensive operations and treatments. Check out the examples below shared by Nib:
Finally, just to share stats from another insurer who provides Medical Cover, Partners Life, below you can see the amount of claims they’ve paid since 2011, the biggest claim paid, the average claim age, and the top reasons for claiming. Â
Source: Partners Life – The Story Behind Our Claims
So, in summary, these increases are a reflection of what’s going on with increasing cost across the healthcare system. We are fortunate that we do have a public health service here in New Zealand, especially compared to other countries, and in an emergency, this is extremely valuable. You just need to weigh up the importance of having your health insurance covers in place, based upon your own health, family medical history, access to Pharmac (and maybe Medsafe drugs), and how the premiums can ‘fit’ into your lifestyle expenses. Having the choice of changing your excess and removing ‘add-on’ benefits can be options you may wish to consider too.Â
Finally, contact your insurer, or your insurance adviser, to discuss your covers and options available to you.Â
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