Switching Health Insurers in NZ: What You Lose When You Move
Health insurance premiums rise every year, and at some point the renewal letter makes you look at what else is available. That is a reasonable thing to do. What follows is the part that is not obvious.
Moving to a new insurer means being underwritten again. Your health as it is today, not as it was when you first took cover, decides what the new policy covers.
The thing that actually goes wrong
Say you have held cover for eight years. Four years ago you were investigated for a knee problem. It settled without surgery and you have not thought about it since. Your current policy covers your knee, because the problem arose after the policy started.
You switch. The new insurer asks about your medical history. You disclose the knee, because you must. The new insurer covers you and excludes your knee.
Nothing improper has happened. You have simply converted a covered condition into an uncovered one, in exchange for a lower premium, and you will not discover the consequence until the knee becomes a problem again.
This is the single most common way people lose money on health insurance, and it happens most often to people being helpful, shopping around, being diligent, trying to save.
What "pre-existing" actually means
Insurers do not define it as "a condition you have been diagnosed with". The definitions are wider, and they usually capture conditions that existed before the policy started, whether or not they had been diagnosed, and often whether or not you knew about them.
Symptoms you mentioned to a GP count. Investigations that found nothing count. A referral you never followed up counts. The test is generally about whether signs or symptoms existed, not whether anyone put a name to them.
We go through the mechanics in health insurance and pre-existing conditions, and it is worth reading before you get a competing quote rather than after.
Where switching does make sense
It is not always the wrong move. Switching is often right when:
- You are in good health with a clean recent history. Nothing to exclude means nothing to lose.
- The new plan covers something yours does not, and the gap matters to you, non-Pharmac cancer drugs being the clearest example.
- Your current plan carries a restriction that fails your actual risk, such as a six-month rule on specialist cover when your realistic use is investigation.
- The new insurer offers transfer terms that recognise your existing cover.
That last one is the important one, and it is worth asking about by name.
Ask about transfer terms
Some insurers will, in some circumstances, take on a new member on terms that reflect the cover they already hold rather than fully re-underwriting them. The specifics vary by insurer, by plan and by case, and they are not published as a general entitlement.
Do not assume it is available and do not assume it is not. Ask directly, in writing, before you cancel anything: will you cover the conditions my current policy covers, and if not, exactly which ones will be excluded?
Get the answer as an underwriting decision, not as a salesperson's reassurance.
The order of operations
If you take one thing from QuoteHub's advisers on switching, take this.
Do not cancel the old policy until the new one is issued and you have read the exclusions.
The sequence is:
- Apply to the new insurer and disclose everything.
- Receive the offer, including any exclusions, loadings or waiting periods.
- Read the exclusions against your actual medical history.
- Compare that offer with what you currently hold, on cover, not on price.
- Only then, if it is genuinely better, cancel the old policy.
People do this in the wrong order surprisingly often, cancelling first because the new premium looked better, then discovering the offer excludes the thing they were most worried about, and finding that the old insurer will only take them back on new terms.
There is no gap-free right to return. Once you cancel, you are a new applicant everywhere, including at the insurer you just left.
Before you shop, look at your excess
The most common reason a premium becomes unaffordable is not the insurer. It is that the policy has a low excess, and a low excess is expensive to maintain as you age.
Raising the excess on the policy you already hold keeps your pre-existing condition position intact and can reduce the premium substantially. It is almost always the first thing to try, and it is the option nobody selling you a new policy will mention.
How much that saves, and what the trade-off is, is worked through in the health insurance excess trade-off.
The summary
Switching health insurer is not like switching power company. The product you receive at the new one is shaped by your health today, and eight years of covered history does not travel with you.
If you are healthy, shop freely. If you have any history at all, get the new insurer's exclusions in writing before you touch the old policy.
Financial advice on this site is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931).
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