Partners Life hikes premiums again

I wonder whether we have reached Peak Policy Wording in the medical insurance space? Premium increases across the market are surely unsustainable based on current benefit wordings, without further inflationary pressure from enhancements that are guaranteed to be passed back. In the disability income space affordability of certain PL lines was previously enhanced by unbundling benefits like critical illness and specific injury options, so these could be removed to reduce cost. Is this an option in the medical space? Say, opting out of MSK condition cover, which would help those who are primarily carrying cover for cancer and cardiac risk, or alongside another cover that doesn't have decent non-Pharmac cover but which has adequate MSK limits?

@Paul, based on nib's bombshell today, I would say we're close, if not there already. With nib's September 2025 renewals getting both the 16.2% applied last September as well as the 22% this year (UH Range), premium pressure is at an extreme level. The rest have got 16.2% plus 33.6% this year for completeness. This makes Partners Life's premium increase news somewhat minor, with their initial 18% premium impact only applying from April 2025. We haven't seen a full year yet, and they're indicating only 2.2%! Policy wording changes are also showing the importance of guaranteed wordings, though in nib's case I can only see premium pressure getting worse on the UHM product with today's news.

I think you both make great points. The news from NIB today is seismic. Co-payments are just shocking news for clients. I think, aside from Southern Cross, which is vertically integrated, we will see some insurers encouraging medical tourism strongly. This could help place pressure on some local treatment providers to keep pricing sensible. Co-payments are dreadful, and imposing a fixed sum/excess would feel better than this. This only leaves UHM as an option with no excess on specialist cover, making the premium higher than their closest competitor. It is an awful optic, and erodes trust. The worrying thing is that they are the second-largest medical insurer, and this is their response to claims.

I just had an NIB client ask me why they have a 38% premium increase this year. I think it is time they activated their communications team and front-footed this in the media rather than just leaving this to advisers to explain. At least SX is in the media. If tall medical insurers would like to get the FSC involved, that would be helpful as they claim a part of their role to improve the financial well-being and confidence of New Zealanders. The FSC seems to have fallen asleep over the past 12 months. Advisers need real help right now to assist clients in hanging on to their medical plans. It is almost impossible to stop cancellations with these constant increases. Advisers need reassuring now, not just clients.

These kinds of premium increases are simply not sustainable for the average policy holder let alone people looking to take out new cover. The reality is that for most couples with a mortgage and children private medical insurance is fast becoming a luxury item to have.

It appears that Partners Life is heading down the unbundling route with their Private Medical Cover. It will be very interesting to see the pricing impact of removing various options. 2 of the options - the Guaranteed Wording Option and the Non-Subsidised Drugs Option - are what many would consider indispensable features. Fortunately for their current and future clients, Partners Life now sees things differently. The market needs more long-term affordability measures, and modularity is one way of achieving this (so long as premium savings fairly reflect the loss of coverage).