Households cut health insurance, despite rising claim payouts
Health insurance premiums have risen almost 75 percent in the past five years.
New Zealanders are reducing their health insurance coverage as claim payouts rise, according to a report by the Financial Services Council. In 2025, 9 percent of those with health insurance canceled their policies, compared to 7 percent in 2022. Meanwhile, the average claim payout per member has surged from $1,097 in 2021 to $1,921 in 2025.
Despite this, the council suggests that health insurance is already funding a significant portion of healthcare, expanding access and shielding families from financial hardship due to illness or death. Financial Services Council chief executive Kirk Hope highlighted that rising premiums, up 75 percent in five years, are straining households despite increased usage and treatment costs.
He expressed concern that as people rely more on health insurance and costs escalate, they are cutting back on necessary coverage. Those who abandon their policies must undergo a re-underwriting process, potentially losing coverage for pre-existing conditions. Approximately 35 percent of adults hold private health insurance, with 43 percent through employers or group plans.
To address the issue, Hope proposed removing fringe benefit tax from employee-funded insurance, which could lower costs for employees and employers alike since such plans are community-rated and not underwritten.
Written by urgent.news from RNZ Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
