The renewal letter arrives, the number has gone up again by more than anything else in the household budget, and no explanation comes with it.
The explanation is worth having, because it changes what you should do next.
Two different inflations
Consumer price inflation measures a broad basket of ordinary things. Medical inflation measures the cost of treating people: clinical wages, imported equipment, private theatre capacity, and the steady arrival of procedures and drugs that did not exist a decade ago.
Those two numbers have parted company, and not by a little. Broker and consultancy surveys reported through the trade press put New Zealand medical trend in the mid-teens for 2025 and forecast employer medical plan costs rising close to 18% in 2026, against consumer inflation in the low single digits. Whatever the precise figure lands at, the direction has been consistent for several years now.
Premiums follow claims. The pool pays what the treatment costs, then prices next year accordingly.
Some of it is good news
A cancer that had no useful protocol in 2010 may have one now, and that protocol is expensive. Surgical technique has improved in ways that shorten recovery and raise the cost per procedure. The insurance pool absorbs the improvement and passes on the bill, which is a strange way of describing medical progress but an accurate one.
The rest is capacity. Private hospitals are being asked to take on more, including work referred out of the public system, and constrained supply prices accordingly.
What to do, roughly in order
The instinct is to cancel. It is almost always the worst option available, because the cover you hold today was underwritten on the health you had when you took it out. Cancel at fifty-five and reapply at sixty and you are not buying the same product. You are buying whatever your medical history now permits.
Better levers:
- Raise the excess. The single most effective adjustment. It changes what you pay on small claims, not whether you are covered for large ones.
- Separate the essential from the pleasant. Surgical and specialist cover protects you from a five-figure bill. Optical, dental and general practitioner extras are budgeting dressed as insurance. If something has to go, it goes from that end.
- Check for duplication. Employer schemes, credit card travel cover and standalone policies overlap more often than people expect.
- Look at structure, not just price. The same insurer will often have a newer product line, and moving within an insurer can sometimes preserve underwriting where moving between insurers would not.
The principle behind all four is the same. Protect the catastrophic, economise on the predictable. Insurance is a poor way to pay for things you could budget for and the only sensible way to handle things you could not.
Timing
The worst moment to review cover is the week the letter arrives, when the decision gets made under mild irritation. Better to do it now, so that when the letter comes you already know which lever you intend to pull.
Arrange a time to talk. We meet in person, in Hamilton or wherever suits you.
Medical trend and premium figures as reported by Insurance Business New Zealand and B2B News NZ, drawing on broker and consultancy surveys, 2025 and 2026.