What's driving the steep increase in premiums?
If your health insurance premiums feel like they’ve been rising faster than usual, you’re not imagining it. Across New Zealand, medical costs have increased sharply, leading to the highest medical inflation rates we’ve seen in years. At the same time, pressure on the public health system has pushed more people toward private care. This increased demand has resulted in higher costs, and in some cases removed benefits from products that don’t have guaranteed wording.
A surge in medical inflation
Aon’s 2025 Global Medical Trend Rates Report identified that New Zealand’s medical cost inflation (the cost of medical treatment) has jumped from 7.4% in 2024 to 14.5% in 2025, one of the highest increases in the world.
The jump in the cost of medical treatments is driven by several compounding factors:
- More procedures and delayed care from the COVID years now catching up.
- General inflation feeding into wages, equipment, and hospital costs.
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More effective medicines and treatments that are also more expensive.
Radiology costs alone have risen 83% in two years, and specialist costs 160%.
More people claiming more often
Private insurers like Southern Cross, nib and Partners Life are seeing record levels of claims:
- Claims volume has increased as much as 67% for some insurers in five years.
- Claims per policy are up 45% over the same period.
- The cost of claims is up 76% since 2020.
For everyday policyholders, that combination of rising claims and rising treatment costs is exactly what’s feeding into today’s premium increases.
How are Health Insurance companies responding?
With costs rising faster than expected, many Health Insurance companies were caught out and faced record losses. Southern Cross recorded two consecutive annual losses culminating in a record $88m loss last year. NIB recently posted a $10.9m loss in the second half of 2025, down from a $13m profit in the same period the year before.
In order to keep their health insurance products sustainable, insurers needed to increase their revenue and/or reduce costs. Some insurers like NIB moved early with over 30% premium increases on some products in early 2025, followed by smaller increases so far in 2026. Others like Partners Life are only now starting to roll out higher than usual increases.
We also saw both NIB and Southern Cross remove benefits from products that don't have guaranteed wording, and NIB also introduced 20% co-payments on some products that previously had no co-payment.
Why health insurance is more valuable than ever?
New Zealand’s public health system remains under significant pressure. Waiting lists for non‑urgent (but life‑impacting) treatment can stretch months or years. In addition, many life-saving medications that are MedSafe approved are not funded by PHARMAC.
Private health insurance continues to give New Zealanders:
- Faster access to diagnosis and treatment
- Choice of specialist and procedure timing (within some limits)
- Protection of income, avoiding long periods off work waiting for care
- Savings protection by avoiding unexpected five‑figure medical bills
Practical ways to manage your premium costs
From our work with Nautilus clients, here are strategies that help keep cover sustainable:
- Review your cover with your adviser, don’t default to cancelling.
- Consider increasing your claims excess but just make sure you could comfortably pay the excess if needed.
- Remove optional extras like GP, dental, or optical benefits.
- Review your budget and spending as there may be less important items to trim first.
If you are looking for ways to manage your health insurance costs, it may be a good time to get specialist financial advice.
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