Rising Health Insurance Premiums Driven by Increased Claims and Treatment Costs

Health insurance premiums have experienced notable increases recently, particularly impacting older and retired individuals in the Canterbury region. Southern Cross Health Insurance attributes these rises to a substantial increase in both the number and cost of claims, with claims activity rising from about one-third of members in 2019 to 50 percent in the past two years. Furthermore, medical provider costs have climbed, reflecting broader economic pressures.

Data from Southern Cross reveals that members over 60 years old contribute disproportionately to claims costs, with expenditures three times higher than those for members aged 35 to 49. This difference underscores the risk-based nature of health insurance pricing, where increased usage by older demographics drives higher premiums.

Southern Cross emphasizes the shared risk model of insurance, explaining why flat-rate policies that do not increase with age are not feasible without shifting costs to other age groups. To manage affordability, the insurer suggests policyholders consider options such as introducing or raising excess amounts, which can lower premiums by encouraging self-funding of smaller claims.

The insurer highlights the importance of reviewing health insurance coverage regularly to align with current health needs and financial situations, especially for older members facing cost-of-living pressures. Southern Cross advises against cancelling policies without consultation, noting that long-term policyholders typically realize value in payments relative to claims received.

Overall, the rise in claims volume and cost, coupled with economic pressures, is reshaping the health insurance landscape for older adults in New Zealand. Southern Cross remains the largest health insurer in the country, serving over 950,000 members and advocating proactive communication with insured individuals to optimize coverage and affordability.