Why Health Insurance Premiums Keep Rising in NZ (2026) and What You Can Do

NZ medical inflation hit 14.5% in 2025, and that flows straight into your renewal. Here is what actually drives a health insurance premium increase — claims inflation and age-banding — and the levers that can cut cost without losing the cover you have.

If your health insurance renewal landed with a double-digit increase, you are not imagining it and you have not been singled out. Premiums are rising across the whole market, and for reasons that have little to do with your own claims. Understanding what is actually driving the increase makes it easier to decide what, if anything, to change — because some of the cost is structural and some of it sits on levers you can adjust.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Before acting, consider whether it's right for you and seek advice tailored to your circumstances.

TL;DR: The main driver is medical inflation, which jumped to 14.5% in NZ in 2025 from 7.4% the year before — far above the 2.2% general CPI.¹² Age-banding then layers on top, so the same cover costs more each year as you get older. The levers that genuinely reduce a premium are excess, plan tier and optional modules — not cancelling cover you may struggle to replace later.

Why did my health insurance premium jump this year?

A health insurance premium is built from a few moving parts, and in 2024/25 most of them pushed in the same direction at once.

The biggest single force is medical inflation: the rising cost of the treatment your insurer pays for. In New Zealand that cost rose 14.5% in 2025, up from 7.4% in 2024 — one of the steepest rises in the Asia-Pacific region.¹ For context, general consumer price inflation was only 2.2% in the year to December 2024.² So even before anything specific to your policy changes, the underlying cost of claims is climbing several times faster than the cost of living.

On top of that, your own birthday matters (more on age-banding below), and the insurer's overall claims experience feeds in. Across the 2024/25 round, the major insurers announced large base premium increases: Partners Life 20%, AIA 17%, UniMed 16%, Southern Cross 21% and nib 33.6%.³ When age-banding is added to a base increase like that, some families saw their total premium rise by more than 50% in a single year.³

So the honest answer to "why did mine jump" is usually a combination: a base increase driven by claims inflation, plus an age step, occasionally plus a change to your plan or excess. None of those is a penalty for claiming — they reflect what is happening to costs across the system.

How does age-banding push premiums up over time?

Most NZ health insurance is priced on "rate-for-age," often called age-banding. Each year, or each age band you move into, the rate for the same cover steps up because the likelihood of claiming rises with age. This happens quietly in the background and is separate from the headline base increase the insurer announces.

The effect compounds over a lifetime. In Consumer NZ's 2025 survey, the average monthly premium for a 70-year-old (on a $500 excess) was $547, against $109 for a 35-year-old on the same excess — roughly five times higher.⁴ That gap is not the insurer being unfair to older members; it reflects that a 70-year-old is far more likely to need surgery or treatment in any given year.

The practical point is that age-banding makes a premium increase normal even in a year with low base inflation. It also means the value of holding well-specified cover tends to rise as you age, at the same time as the premium does. That tension — rising cost against rising usefulness — is exactly what a review is for.

What is medical (claims) inflation and why is it so high?

Medical or claims inflation is the rising cost of the things a health policy pays for: surgeons, hospital theatre time, diagnostics, and increasingly expensive drugs. It runs well ahead of general inflation, and it is the core reason premiums keep climbing.

The numbers behind the system show why. The NZ health insurance industry covers around 1.45 million people and paid out about $1.8 billion in claims in the latest reported year, with claims rising on the back of medical inflation, more people claiming, and an ageing population.⁶ Uptake has grown too: FSC research found 37% of respondents held health insurance in 2023, up from 32% in 2022, with roughly 250,000 more New Zealanders gaining cover over the prior year.⁷ More members claiming more, against costlier treatment, all pushes premiums in one direction.

The clearest single measure is what insurers actually pay out. KPMG reported that NZ health insurance service expense — claims and the costs directly tied to them — rose 18% in a single year, from $2,032 million in 2022/23 to $2,406 million in 2023/24.⁸ When the cost of claims rises that fast, premiums follow, because premiums are mostly there to fund claims rather than insurer margin.

Illustrative breakdown, based on FSC, Aon and KPMG data, 2025. Components and their relative size vary by insurer, plan and individual.

What levers actually reduce your premium?

When a renewal bites, there are three real levers — and one option that usually is not the answer. The genuine levers all keep your core cover (surgery and cancer/non-Pharmac drugs) intact while trimming what surrounds it.

• Excess. Your excess is what you pay towards a claim before the insurer pays the rest. Raising it lowers your premium, in exchange for paying more at claim time. It is often the single most effective lever for offsetting an increase without cutting cover. We cover the trade-off in health insurance excess choices in NZ.
• Plan tier. Moving to a plan that protects the high-value limits (surgery, cancer drugs) while dropping less critical extras can hold the premium down. The point is to keep the cover you actually hold the policy for.
• Optional modules. Many plans bundle everyday extras — GP visits, dental, optical, physiotherapy. These add premium and usually pay out small, capped amounts. If you claim less than the module costs, trimming it can fund part of an increase.

Here is how those levers compare in practice.

Source: adviser framework, 2026. This is general guidance, not a recommendation about your situation.

Whether any claim is paid depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure. This is a summary only — always read the policy wording.

Why cancelling or downgrading can be a costly mistake

When a premium rises sharply, cancelling can feel like the simplest fix. It is also the lever most likely to cost you later, because of how re-entry works.

The reason to hold health insurance is the expensive, low-frequency event: major surgery, or modern cancer treatment where unfunded drugs can run into six figures. Those costs are exactly what people lose when they drop core cover to save on premium. The everyday modules are the cheap part; the surgical and non-Pharmac limits are the part worth protecting. Why private cover matters for those events is covered in the importance of medical insurance.

The bigger trap is that you cannot always buy the same cover back. Health insurance is not like switching power companies — any condition you have developed since taking the policy can be excluded or loaded if you re-apply later. So a cancellation made to save money in a tight year can quietly remove cover for something you go on to develop, and you may not be able to get it back on the same terms. Adjusting the excess or trimming modules keeps the policy in force and your existing conditions covered, which is usually the lower-risk way to deal with an increase.

How do loyalty and switching interact with pre-existing conditions?

Switching insurers to chase a lower premium is the most common instinct, and the one that most often backfires. The central issue is re-underwriting.

When you switch insurers, you apply for a new policy, and a new policy assesses your health afresh. Any condition that arose while you were on your current policy can become a permanent exclusion on the new one. So a switch that looks cheaper on premium can strip cover for something you have developed in the meantime. We go deeper on how insurers handle a health history in pre-existing conditions and insurance options in NZ.

Loyalty cuts the other way. Staying with your current insurer keeps your existing conditions covered, because that insurer already accepts them. Some plans also build in loyalty-style benefits that bring certain pre-existing conditions into cover after a continuous-cover period. That is genuine value in staying put — value you forfeit the day you switch and reset the clock.

Source: adviser framework, 2026. General guidance, not a recommendation about your circumstances.

Switching is sometimes the right move — a better-specified plan with no new exclusions can be worth it. But it should follow a careful, like-for-like comparison, not a cheaper quote on its own.

How does an adviser review cover when premiums bite?

A review when the premium jumps is not about reflexively changing something. It is about deciding, on purpose, which lever (if any) fits your situation, and confirming the cover you are paying more for is still the cover you actually need.

In practice a review reads your policy document and works through a short sequence:

• Read the increase. Separate the base inflation component from the age-banding step, so you can see what is structural and what is adjustable.
• Check the core limits. Confirm your surgical and non-Pharmac drug limits have kept pace with what private treatment now costs. This is the part of a plan that ages worst.
• Test the levers. Model what a higher excess, a plan-tier change, or trimming an unused module would do to the premium, while leaving the high-value cover intact.
• Weigh switching honestly. Compare across insurers where it is sensible, but flag where a switch would re-underwrite you and cost cover for a condition you have developed.

Smiths Financial works with a panel of selected insurers, listed in our disclosure, and we compare your options across them rather than against a single quote. There's usually no direct charge to you — we're typically paid a commission by the provider, which doesn't change the premium you pay. We manage any conflicts of interest in line with our duty to prioritise your interests; full details are in our disclosure.

Frequently asked questions

Why do health insurance premiums keep rising in NZ? The main driver is medical (claims) inflation — the rising cost of surgery, diagnostics and drugs — which reached 14.5% in NZ in 2025, up from 7.4% the year before and well above the 2.2% general CPI.¹² Age-banding then adds to it, because the same cover costs more as you get older.⁴ Insurers' overall claims have been rising too: industry service expense climbed 18% in a single year.⁸

What is age-banding and can I avoid it? Age-banding (or rate-for-age) means the rate for your cover steps up as you move into higher age bands, because the chance of claiming rises with age. In Consumer NZ's 2025 survey the average premium for a 70-year-old was about five times that of a 35-year-old on the same $500 excess.⁴ You cannot avoid it on a rate-for-age plan, but you can manage the total premium through your excess and plan choices.

How much have health insurance premiums actually gone up? Consumer NZ found the average policy rose by roughly NZ$100 a month between its 2023 and 2025 surveys.⁵ Across 2024/25, major insurers announced base increases from 16% to 33.6%, and once age-banding was added, some families saw rises above 50%.³

What can I do to reduce my premium without losing cover? The three genuine levers are raising your excess, adjusting your plan tier, and trimming optional modules you don't use — all of which can keep your core surgical and non-Pharmac drug cover intact. Cancelling or heavily downgrading core cover saves the most short term but is the hardest to reverse later, because re-applying re-underwrites your health.

Should I switch insurers to get a cheaper premium? Not on premium alone. Switching means a new policy that re-underwrites you, and any condition that arose while you were on your current policy can become a permanent exclusion on the new one. If you are young and healthy a like-for-like comparison may be worthwhile; if you have developed conditions, adjusting your existing plan is often lower-risk. Whether a claim is paid still depends on the policy terms and your disclosure.

Will an adviser charge me to review my cover? There's usually no direct charge to you — we're typically paid a commission by the provider, which doesn't change the premium you pay. An adviser can read your policy, separate the inflation and age-banding parts of an increase, test the levers, and flag where switching would cost you cover. We manage any conflicts of interest in line with our duty to prioritise your interests; full details are in our disclosure.

This article is general information only and is not personalised financial advice. It does not take into account your particular financial situation, goals or needs. Whether a claim is paid depends on the terms, conditions, exclusions, stand-down periods and underwriting of the specific policy, and on your disclosure — always read the policy wording. Craig Smith Business Services Ltd (FSP712931), trading as Smiths Financial, holds a Class 2 licence issued by the Financial Markets Authority to provide financial advice on personal risk insurance, health insurance, general insurance, KiwiSaver and managed funds, and is a member of the Financial Dispute Resolution Service (FDRS), a free and independent dispute resolution scheme. Written by Henry Smith, Financial Adviser; reviewed by Craig Smith, Principal Adviser. Figures are correct as at 6 June 2025. Last reviewed 6 June 2025.