Health insurance claims are rising. What does the latest data tell us?

Fresh industry research shows two trends occurring at the same time: health insurers are paying more in claims per member, while a larger share of insured people are ending their cover.

Research by MartinJenkins, highlighted by the Financial Services Council, shows the average amount paid in health insurance claims per member was $1,921 in 2025. That figure was 75% higher than in 2021. The proportion of insured New Zealanders terminating a policy was 9% in 2025, compared with 7% in 2022.

The report’s highlights also show that 80,771 people ended major medical cover in 2025. Those figures do not explain why each person left, but they do show that affordability and the changing cost of healthcare are important issues for the private health insurance market.

What may be behind higher claims?

The amount insurers pay can change for several reasons. More claims, different types of treatment and higher prices for medical services can all affect total claims costs.

The FSC’s release points to rising treatment costs as one of the pressures in the system. When insurers face higher claims costs over time, that can contribute to premium changes, although the effect on any individual policy will depend on the insurer and the cover involved.

Premium changes can also vary by insurer and policy structure. The report notes that some consumers have responded to rising costs by moving to lower-premium plans, increasing excesses or removing benefit options.

Cost pressures can lead people to reconsider cover

When regular household expenses increase, insurance may come under review alongside other commitments. Before reducing or cancelling health cover, it is worth understanding what would change and whether the decision could be difficult to reverse later.

For example, a person who cancels a policy and applies for cover again in future may be assessed on their health at that later date. Depending on the insurer and policy, conditions that arose in the meantime could affect what is offered.

There may also be ways to reduce cost without removing cover completely. Depending on the policy, possibilities could include changing the excess or reviewing benefits and limits. Any change needs to be considered against what the policy would still provide.

Price is only one part of the policy

Claims data gives useful context, but it cannot tell an individual whether a particular health policy represents good value for them. The relevant details include the benefits covered, exclusions and limits, the excess, the premium and how the policy fits with that person’s needs.

Policies can differ substantially even when premiums look similar. One person may have broader surgical or specialist benefits, while another may have narrower benefits or accept a larger excess in return for a lower premium.

Review the options before making a change

If health insurance is becoming harder to afford, reviewing the policy can help clarify the choices before anything is changed. An insurance adviser can explain the existing cover, discuss available alternatives and outline the possible implications based on your circumstances.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.