Understanding what’s behind rising health insurance costs
Health insurance premiums have been increasing this year, a trend that’s made headlines and prompted questions from policyholders. While the numbers can sound confronting, the underlying reasons tell a more balanced story. Higher costs don’t just reflect inflation; they also show more people using their cover, accessing treatment sooner, and relying on private healthcare to take pressure off the public system.
According to RNZ, some customers have seen premium rises of around 25percent. Insurers say this reflects record levels of claims, with Southern Cross members using their health insurance “more than ever before.” The organisation has processed more than 4 million claims this year, a sign that cover is being put to good use.
Why costs are climbing
Southern Cross chief executive Nick Astwick explained that about 70 percent of premium growth over the past two decades has come from members using more healthcare services rather than from rising treatment costs. In short, more people are getting the medical care they need, from diagnostics to elective surgery, and that activity needs to be funded.
Globally, New Zealand’s medical trend rate has also surged, rising from 7.4 percent in 2024 to14.5 percent in 2025. Much of this increase is linked to postponed procedures finally taking place after Covid delays, the impact of general inflation, and the higher cost of new medical technology.
What insurers are doing
Local insurers have been making adjustments to keep their products sustainable and maintain benefits that matter most. For example, it was reported that Partners Life made small premium changes across its Private Medical Cover to preserve long-term guarantees such as non-PHARMAC drug cover and comprehensive wording.
For insurers such as Southern Cross, premium reviews help balance the needs of younger and older members in the same pool. Options such as surgical-only plans, higher excesses, or co-pay structures can help manage costs while keeping cover in place.
How advisers can help
Premium changes are a good reminder to review your health cover. A quick chat with an adviser can uncover simple ways to stay protected and ensure the policy still fits their needs and budget.
Many people who regularly review their cover, find that small adjustments such as increasing an excess or removing benefits they no longer use, can make cover more affordable without losing important protection.
Rising health costs are a complex issue, but they also show that private health insurance continues to play an important role in giving New Zealanders timely access to care. With good advice and regular reviews, it’s possible to keep that protection sustainable for the long term.
The information contained in this publication is intended for general guidance and information only. It has not been personally prepared for you. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult with us before making any investment decision. Historical market performance may not be indicative of future market performance.