Insurers see 'unprecedented' claims levels

The growth in claims is being driven by public waiting lists, medical inflation and changing attitudes towards preventive healthcare

Partners Life paid out record claims of $325 million in the last financial year, and chief actuary Kate Dron confirms what advisers have been seeing - claims numbers are “unprecedented.”

The $50 million year-on-year increase included more than $80 million in medical claims and $60 million in disability payouts, with over 16,000 new clients joining Partners Life’s Private Medical Cover during 2024.

Other insurers have been seeing similar trends. In the nine months to March 2025, nib saw a massive 320% rise in chemotherapy claims.

Dron says the increase has been a combination of several factors, including a strained public system, rising treatment costs and more demand for diagnostics and screening.

She notes that immigration is also playing a role, with newcomers from countries where health consciousness is more ingrained than the traditional Kiwi "she'll be right" mentality.

“There has been more in the press about cancer, for example, hitting people at younger ages,” Dron explains. “There’s a change in attitude and a rising awareness that these things don’t just happen when you get older.”

“That means we’re seeing much higher utilisation of health insurance compared to what we’ve seen in the past. I don’t see that reverting to “I don’t need to look after myself anymore”, I think we’ve got a new normal.”

Managing cost pressures

Medical inflation is still outpacing general price rises, with insurance sector inflation hitting 12.9% year-on-year in September 2024 compared to overall CPI of 2.2%.

Aon plc’s Global Medical Trend Rates Report looked at annual employer-sponsored medical plan costs, and found a massive 14.5% rise in New Zealand’s medical trend rate - one of the highest in APAC. Dron says that medical inflation has always been above the standard rate of CPI, but it’s been happening on a much larger scale over the last year.

“I do expect it to revert back to a more normal level,” Dron says. “But it will still outpace CPI.”

Dron adds that Partners Life’s recent out-of-cycle premium increase was strategically done to have more incremental adjustments throughout the year as opposed to a “big leap” annually. For those concerned about affordability, she says the key to lowering premiums is now increasing excess levels.

Still, despite the increased costs, she says this hasn’t deterred most Kiwis from obtaining or maintaining their cover.

“We are still seeing a good uptake of new people taking out health insurance,” she says. “There is a good understanding of its value.”

“The public system is a wider issue,” she adds. “There are discussions being had on how the public and private system can work together better, and that’s one of the key issues we have. That’s something we’re seeing across the world too, so New Zealand is not unique.”