If you’ve noticed your health, life, or income protection insurance premiums increasing recently, you’re not alone. Across New Zealand, many individuals and families are opening renewal notices and wondering “Why has my premium gone up again?” At the same time, many households are already feeling pressure from higher mortgage rates, groceries, fuel, and general living costs, so it’s understandable that insurance is being reviewed more closely than ever.
As a Financial Adviser here in Nelson, who specialises in Risk, I’ve been having more conversations recently with clients who are considering reducing or cancelling cover altogether simply to free up cashflow. But before making that decision, it’s important to understand what’s actually happening in the insurance market, and what options may be available.
Why are insurance premiums increasing?
The short answer is, claims costs are rising significantly.
Over the past few years, insurers across New Zealand have seen substantial increases in:
- medical treatment costs,
- specialist and surgical expenses,
- mental health-related claims,
- cancer and trauma claims,
- and longer recovery periods for people unable to work.
At the same time, the public healthcare system continues to face pressure, meaning more people are relying on private healthcare and health insurance to access timely treatment. Insurance companies are also being impacted by global reinsurance costs (essentially insurance for insurers), which have risen considerably in recent years.
The result is that premium increases are now being felt across much of the market, particularly for:
- Health Insurance,
- Income Protection,
- Trauma Cover,
- and policies with stepped premiums.
Why cancelling cover completely can be risky
When premiums rise, the natural reaction is often “Maybe I should just cancel it”, and for some people, that may genuinely be necessary temporarily. However, many people don’t realise that cancelling a policy and restarting later can create problems, especially if your health changes in the meantime.
Once a policy is cancelled:
- you usually need to reapply from scratch,
- your health is reassessed,
- exclusions may apply,
- and in some cases, cover may become significantly more expensive or unavailable altogether.
This is especially important with:
- Income Protection,
- Trauma Cover,
- and Health Insurance.
Often the people who regret cancelling cover are those who later experience a health issue they never expected.
There may be better options than cancelling
One of the most important things people should know is that insurance policies are often more flexible than they realise.
Rather than cancelling entirely, there may be ways to reduce costs while keeping meaningful protection in place.
Depending on your situation, options could include:
- increasing excesses,
- adjusting wait periods,
- reducing non-essential benefits,
- restructuring cover priorities,
- reviewing whether your current policies still suit your needs.
- Or even taking a premium holiday or policy suspension.
The goal is usually not “having the most insurance possible”, it’s having the right protection for your stage of life and budget.
Insurance is ultimately about protecting choices
For many families, insurance isn’t really about policies or premiums.
It’s about protecting:
- the ability to pay the mortgage,
- time off work to recover,
- access to medical treatment,
- and financial stability during difficult periods.
The reality is that illness or injury can place enormous pressure on families emotionally and financially, often at the exact time income becomes uncertain. Good insurance planning is about reducing that pressure where possible.
Final thoughts
If your premiums have increased recently, you’re certainly not alone, but before cancelling cover completely, it’s worth reviewing your options carefully. In many cases, a few adjustments can help make cover more manageable while still protecting what matters most. If you’re unsure whether your current insurance still fits your needs or budget, getting a second opinion can be valuable, especially as the insurance landscape continues to change across New Zealand.
