Report
The industry's biggest election ask would cut your employer's bill, not your premium
Source: FSC, Our Prosperity Agenda: the 2026 Election Manifesto
Scrapping the tax on workplace health and life cover would save an employer roughly half of every dollar of premium it pays. The employer keeps that saving. Of 21 recommendations, only two could change a number on your policy.
By Henry Smith · Regulation · 2026-08-12
What this means for you Nothing on this list can change what you pay before your next renewal, because every recommendation with a price effect needs either a new law or a commercial deal that has not been done. If you hold health or life cover bought by your employer, the fringe benefit tax proposal (the tax an employer pays on non-cash benefits such as a health policy) would cut your employer's bill rather than your premium, and two government agencies are already on record against it. If your health policy pays for medicines the government does not fund, letting insurers buy at the prices Pharmac negotiates is the item that would move that cost the most, and as written it names no method, agency or date.
If your health or life cover was bought for you by your employer, the insurance industry's biggest election ask this year would save that employer roughly half of every dollar of premium it pays, on Inland Revenue's published rates. The saving goes to the employer, not to you. That is recommendation 18 in the 21 point wish list New Zealand's insurers and investment firms have published for the 2026 election, and two government departments are already on record against it.
Of the 21 recommendations, five are about insurance. Only two could change an actual number on a health or life policy, and both need a law that has not been written yet.
Nothing on the list changes what you pay this year. What it shows is where the industry wants money to move next, and which of those moves would reach you.
Who wrote this, and why does that matter?
The Financial Services Council (FSC) is the industry body for New Zealand's life insurers, health insurers and investment firms. On 29 July 2026 it published "The Prosperity Agenda", 21 recommendations across three themes: strengthening the system, building prosperity, and protecting prosperity (FSC, 29 July 2026).
It helps to read it as what it is, a lobbying document. The FSC says its "100+ members" include "life, health, disability and income insurers" who between them "manage more than $140 billion in funds and pay $2.8 billion in life and health insurance claims each year" (FSC, Election Manifesto 2026, July 2026). Every recommendation was written by the industry that would be paid under it. That does not make them wrong, and several are plainly in a customer's interest, but each is an argument with a counter-argument worth hearing.
Which parts could change what you pay?
Five of the 21 sit in the FSC's Protecting Prosperity section, and those are the insurance ones. A sixth, recommendation 4, sits earlier and would take life and health insurers out of the climate reporting rules, which make large financial firms publish an annual report on climate risk. One term first: fringe benefit tax is what an employer pays when it gives staff something other than cash, such as a health policy.
Here is what each would do.
| Recommendation | What it would actually change | What has to happen first |
|---|---|---|
| 18. Scrap fringe benefit tax on employer-bought health and life cover | Your employer stops paying tax on the cover it buys for you, worth 49.25% of the premium value at the pooled rate most group schemes use, or 63.93% at the single rate. It cuts the employer's bill, not your premium | A change to tax law. Inland Revenue has advised that an exemption would eat into the personal income tax base |
| 19. Let insurers buy medicines at Pharmac's prices | Cuts the drug bill inside the part of a health policy that pays for medicines the government does not fund, the benefit with the least control over its own cost | A purchasing change and a law change. The manifesto sets out no method |
| 17. Public and private hospitals sharing care and costs | Changes where an operation happens and who pays for which part of it, so it could change what you pay on the day | Contracts between insurers and Health New Zealand. No law is named |
| 4. Take life and health insurers out of climate reporting | Removes $261,500 to $600,000 a year of compliance cost per insurer, on officials' estimate | An amendment to a bill before Parliament. The regulator has already stopped enforcing the rule |
| 20 and 21. Insurance in retirement planning advice, and insurance as essential financial infrastructure | Nothing directly. One asks the government to "explore opportunities", the other is wording that shapes later decisions | A policy work programme |
Our reading of the same FSC Election Manifesto 2026. Tax rates from Inland Revenue; the compliance cost from the Cabinet paper on the climate reporting exemption, both.
Would the tax break reach you?
Not directly. The employer writes the cheque for a workplace scheme, so the employer keeps the saving unless it chooses to pass some on, and nothing in recommendation 18 requires that. What an employee might feel is indirect: a scheme that survives a budget round rather than a smaller renewal letter. We work the rates through in our piece on the industry's modelling.
The tax ask also has the longest road ahead. A Ministry of Health briefing note records that Treasury and Inland Revenue do not support fringe benefit tax changes for private health insurance, with Inland Revenue advising that an exemption would "materially erode the integrity of the broad personal income tax base and create equity concerns". Budget 2026 changed some fringe benefit tax rules, but only for motor vehicles, and left insurance premiums alone (Insurance Business NZ, 12 August 2026).
Which one is closest to happening?
The climate reporting change, by a long way. It is in a bill before Parliament, and the Financial Markets Authority has said that from 19 June 2026 it will not take action against life and health insurers that stop publishing climate statements (FMA, 18 June 2026).
It is the only item that has already cut an insurer's costs, and the smallest. Spread across every policy an insurer covers, it is a rounding error on a premium even if insurers hand back every cent. We show the working in our piece on the climate reporting exit.
Which one would actually cut what your cover costs?
The Pharmac ask. Pharmac is the government agency that buys medicines in bulk, which is why it gets them cheaply. Many health policies also cover drugs Pharmac does not fund, the part of a policy with the least control over its own cost, because it pays whatever the supplier charges. Buying at Pharmac's negotiated prices would cut that cost directly, and unlike the tax ask, the saving would sit inside the policy rather than with an employer.
It is also the least developed thing on the list. The manifesto gives the idea 32 words, and names no method, no agency and no date.
What about the rest of the list?
The remaining recommendations are about retirement saving, financial advice and capital markets, and none touches a premium. Twelve sit in Building Prosperity, nearly all on retirement saving: enrolling everyone, higher contribution rates, a hardship pathway and rules for drawing the money down. The rest sit in Strengthening the System, among them easier access to financial advice and a dedicated minister for financial services. The headline goal is one trillion dollars saved for retirement by 2040 (FSC, Election Manifesto 2026). Two of them would change a pay packet rather than a premium: ending total remuneration, where an employer counts its retirement scheme contribution as part of the salary it offered you, and lifting contribution rates.
What does this mean for your cover?
Nothing here reaches your next renewal. Every recommendation with a price effect needs either a new law or a commercial deal that has not been done.
If your cover comes through your employer, recommendation 18 is the one to follow, and the thing to watch is a tax bill in Parliament, not an announcement from the FSC. If your health policy covers medicines the government does not fund, the Pharmac item would move your costs the most, and as written it has no method attached. If you bought your own cover and it has no non-funded medicines benefit, there is nothing on this list for you.
What could we not check?
We read the manifesto, both FSC blog posts and the polling release. We did not speak to the FSC and were not briefed. The effects in the table are our reading, not the FSC's claims and not a forecast: the manifesto attaches no cost, timeframe or method to any individual recommendation, so there was no FSC number to test.
We have not assessed any party's position, how likely any of this is to be adopted, or whether any recommendation is good policy. Where a government agency has put a contrary view on the record, we have quoted and named it.
One figure appears twice in FSC material with two different meanings. The foreword says the sector "manages over $340 billion in savings and investments", while the About section says FSC members "manage more than $140 billion in funds" (FSC, Election Manifesto 2026). The first is the whole sector, the second just this association's members.
What this means for your cover
What a policy pays, how to size it, and how a rule change reaches an existing policy. Life insurance in New Zealand
Sources
Every source below was read and checked on 21 August 2026.
- FSC, Our Prosperity Agenda
- FSC, Election Manifesto 2026: The Prosperity Agenda
- FSC, Launching our 2026 Election Manifesto
- FSC, Kiwis want a long-term plan for KiwiSaver
- Inland Revenue, Calculation options and rates for fringe benefit tax
- Cabinet paper, Removal of Health and Life Insurers from the Climate-Related Disclosures Regime
- FMA, No action on climate reporting obligations for health and life insurers
- Insurance Business NZ, Group insurance FBT proposal faces documented government opposition
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