Health Claims Per Member Up 75%, Terminations Up From 7% to 9%
Source: Financial Services Council, the overlooked role of insurance
An industry-commissioned report puts the average health insurance claim paid per member at $1,921 in 2025 and the termination rate at 9%. Those are the same story from two ends, and the arithmetic between them is not in the report.
By Henry Smith · Health system · 2026-08-14
The average health insurance claim paid per member in New Zealand reached $1,921 in 2025, 75% higher than in 2021, and over roughly the same period the share of insured people terminating their policy rose from 7% to 9%. Those two figures were published together on 14 August 2026 and the report does not connect them.
What the Financial Services Council published
The Financial Services Council published a summary of a MartinJenkins report it commissioned, on 14 August 2026. The stated findings are that the average health insurance claim paid per member has risen 75% since 2021 to $1,921 in 2025; that policy terminations rose from 7% in 2022 to 9% in 2025; that 80,770 people ended major medical cover; that 35% of adults hold private health insurance; that 43% of insured New Zealanders are covered through a workplace or group scheme; and that life insurance in New Zealand sits at 0.8% of GDP against an OECD average of 3.5% (Financial Services Council, 14 August 2026, retrieved 20 August 2026).
The Financial Services Council is an industry association. Its members are the insurers and fund managers whose products the report is about, the report was commissioned by the association, and the same page sets out the association's election manifesto asks, which include removing fringe benefit tax from employer-provided health and life insurance and expanding co-funded healthcare models. Read the numbers on that basis. We have not spoken to anyone at the Financial Services Council or at MartinJenkins. We read the published page.
Two other figures on the page are the association's own polling rather than the MartinJenkins report: that 55% of respondents want the Government to prioritise greater use of public and private healthcare together, and a quote from chief executive Kirk Hope that "health insurance is being used more, claims are rising, treatment costs are rising, and households are feeling it".
What the claims figure implies about the years in between
The report gives an endpoint and a percentage change, which is enough to reconstruct the start.
If $1,921 is 75% above the 2021 figure, the 2021 figure was about $1,098. The average claim paid per member therefore rose by about $823 over four years. Compounded, that is a rate of about 15.0% a year, every year, for four years.
That is the number worth holding on to, because claims paid are what premiums have to fund. An insurer facing 15% annual growth in the average claim it pays cannot hold premiums flat for long. The report publishes the claims number and the termination number in the same list without putting a rate on either.
| Figure | Published by the FSC | Our arithmetic |
|---|---|---|
| Average claim paid per member, 2025 | $1,921 | |
| Increase since 2021 | 75% | implied 2021 figure of about $1,098 |
| Implied annual rate | not published | about 15.0% a year for four years |
| Termination rate, 2022 | 7% | |
| Termination rate, 2025 | 9% | a relative rise of about 28.6% |
| People who ended major medical cover | 80,770 | implies a base of about 897,444 if 80,770 is the 9% |
| Terminations attributable to the rate rise | not published | about 17,949 a year at most |
Our arithmetic on the figures published by the Financial Services Council, 14 August 2026, retrieved 20 August 2026. The implied base and the attribution assume 80,770 is the count corresponding to the 9% rate, which the report does not state.
How much of the termination rise can claims inflation explain?
The honest answer is that the published figures cannot separate it, so the useful number is the ceiling rather than the estimate.
Take the two termination rates at face value. If 80,770 people ending major medical cover corresponds to the 9% rate, the same base at the 2022 rate of 7% would have produced about 62,821. The rise in the rate is therefore worth about 17,949 people a year. Every percentage point on that rate is roughly 8,974 people.
That 17,949 is the maximum claims inflation can be responsible for, because it is the entire increase. Attributing all of it to affordability would require that nothing else changed between 2022 and 2025: not the age profile of the insured population, not employment, not the number of new policies written, not the mix of major medical against everyday plans. None of that is published, so the true share is somewhere between zero and all of it.
What the arithmetic does establish is the exchange rate. Roughly 75% of claims inflation sat alongside roughly 2 percentage points of extra termination. That is about 0.027 percentage points of termination for each 1% of claims inflation. If claims per member keep rising at the reconstructed 15.0% a year, the same relationship implies about 0.4 percentage points a year on the termination rate. Continue that to 2030 and the rate reaches roughly 11%. That is a straight-line extrapolation of a correlation across three data points, it is ours and not the report's, and it should be treated as an arithmetic consequence of the published figures rather than a forecast.
What the workplace figure does to the picture
The single most consequential number on the page is the one that gets the least attention: 43% of insured New Zealanders hold their cover through a workplace or group scheme.
That means the affordability question is not one question but two. For roughly 57 in every 100 insured people, a premium increase lands on a household budget and terminating is a decision they make. For the other 43, the decision belongs to an employer, and the trigger is a budget review or a job change rather than a household one. A report that reports a single termination rate across both groups is averaging two different mechanisms.
It also explains the association's policy ask. The Financial Services Council wants fringe benefit tax removed from employer-provided cover, and the channel that change would affect is the one carrying 43% of insured lives. NZIER modelling commissioned by the same association estimates such a change would bring about 201,408 additional policyholders into employer-sponsored health cover, which is more than ten years' worth of the extra terminations calculated above. We set out the tax arithmetic, and Inland Revenue's stated objection to it, in employer-sponsored health insurance and the FBT rate.
What it means for your cover
If you hold health insurance personally, the practical takeaway is that 15% a year is the pressure your premium is being asked to absorb, on top of the age loading that applies to you individually. Those two effects compound. Our guide to health insurance cost by age covers the age component.
If your cover comes through work, the exposure is different and larger than most people assume. Group cover usually waives or relaxes underwriting on joining, and that concession does not travel with you. The window to move to an individual policy is short and it closes on the day the job does.
And if you are considering dropping cover to manage the premium, the order matters. Reducing the everyday or optical component, or lifting the excess, keeps the underwriting you already have. Cancelling and rebuying later does not, because anything diagnosed in the gap is a pre-existing condition on the new policy.
The honest limits
The full MartinJenkins report was not reachable. The link on the Financial Services Council's page returned a 404 error when we requested it on 20 August 2026, so every figure here comes from the association's own summary of its own commissioned report rather than from the report itself. We could not check the definitions, the data sources, the sample, or which insurers are included.
The composition of the 80,770 is not published. The page does not say how many were major medical policies against other products, how many were people versus policies, whether a person moving between insurers is counted as a termination, or what the denominator is. That last omission is why the implied base of 897,444 above is a conditional and not a fact.
The two rates are on different bases. The 35% is stated as a share of adults and the 43% as a share of insured New Zealanders of all ages. We have not multiplied one by the other, because the report does not say the workplace share among adults matches the all-ages share.
We could not verify a current nominal GDP figure from a primary source, so we have not converted the gap between 0.8% and 3.5% of GDP into dollars. The figure is reported here as the association reported it.
Finally, the periods do not line up. The claims figure runs 2021 to 2025 and the termination figures run 2022 to 2025. Any rate we derive by putting them side by side inherits that mismatch.
Sources
- Financial Services Council, the overlooked role of insurance in New Zealand's health system, the summary of the commissioned MartinJenkins report and all six headline figures, 14 August 2026, retrieved 20 August 2026
- Financial Services Council, MartinJenkins insurance and health report, the full report link published on the page above, which returned a 404 error when requested on 20 August 2026
- Insurance Business NZ, group insurance FBT proposal faces documented government opposition, the NZIER modelling for the FSC and Inland Revenue's stated objection, 12 August 2026, retrieved 20 August 2026
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