Report
Life insurers' profit jumped 47%. Health insurers paid out more than they collected.
Source: KPMG, New Zealand Insurance Update 2026
Life insurers kept 12 cents of profit out of every dollar coming in last year, up from 8.5, because the money from policies grew 5% while the claims bill grew 1%. Health insurers paid out 103 cents per dollar and covered the gap from reserves KPMG says cannot keep absorbing it.
By Henry Smith · Insurers · 2026-06-01
What this means for you Life cover got far more profitable for insurers last year, because the money coming in rose while the claims bill stood still. Health cover ran the opposite way: those insurers paid out more than they collected, which usually leads to bigger price rises or thinner benefits.
If your household pays for both life cover and health cover, the two ran in opposite directions last year. Life insurers kept 12 cents of profit before tax out of every dollar of policy money coming in, up from 8.5 cents the year before. The money coming in grew 5%. The bill for claims and for running those policies grew 1%. Profit before tax jumped 47%, from $341 million to $502 million (KPMG, June 2026).
Health insurers did the reverse. They paid out 103 cents for every dollar they collected, lost $80 million between them, and the largest of them covered its shortfall out of reserves KPMG says cannot keep doing that job.
For life cover, the widening gap is margin sitting inside the price of the sector's policies, and margin is what price competition eats into. For health cover the arithmetic runs the other way, and an insurer paying out more than it collects has only three moves: charge more, cover less, or check claims harder. Neither shift changes a policy already in force. Both change the backdrop to the next renewal letter.
Where these numbers come from
The New Zealand Insurance Update 2026 pulls together the accounts of every licensed insurer in the country. Each contributes its own most recent financial year, with year ends up to 31 December 2025, which the report labels 2024/25.
Two lines do most of the work. Insurance revenue is the money an insurer counts as earned from policies during the year. Insurance expense is what it paid out in claims, plus the cost of running those policies. Subtract one from the other and you get the insurance result: what the insurance business made, before investment returns and tax. The expense ratio is the share of every dollar coming in that goes straight back out.
| Life insurance sector | 2023/24 | 2024/25 | Change |
|---|---|---|---|
| Money in from policies (insurance revenue) | $3,997m | $4,194m | +5% |
| Claims and policy costs (insurance expense) | $3,435m | $3,474m | +1% |
| What was left (insurance result) | $440m | $668m | +52% |
| Profit before tax | $341m | $502m | +47%, our division |
| Share paid back out (expense ratio) | 86% | 83% | down 3 points |
All the dollar figures and the 5%, 1% and 52% are KPMG's. The 47% is ours: $161 million of extra profit on a $341 million base, a division the report prints both halves of but never does.
Why did profit jump when the claims bill barely moved?
Two things did nearly all of it.
The first is the gap between money in and money out. It was $562 million in 2023/24 and $720 million last year, $158 million wider in a single year. Those are our subtractions from the figures above.
The second is reinsurance. Insurers buy insurance for themselves, paying a bigger company, usually overseas, to carry part of the risk on policies like yours. Life insurers paid 8% more for that cover last year, $1,545 million. What counts for profit, though, is the net cost, the reinsurance bill minus what reinsurers paid back towards claims, and the same report puts that down 49%, from $123 million to $63 million. Reinsurers carried more of the load, so insurers kept more.
Together those two account for $218 million of the $228 million rise in the insurance result. Almost none of the jump came from selling more cover.
Which insurer gained the most?
KPMG names Partners Life twice, in two lists it never joins up: once as the biggest gainer of policy revenue, once as one of the biggest cutters of claims and policy costs. Put them side by side and one company took in $51 million more while spending $36 million less, a swing of $87 million.
| Partners Life | 2023/24 | 2024/25 |
|---|---|---|
| Money in from policies | $522m | $573m |
| Claims and policy costs | $498m | $462m |
| Gap between the two | $24m | $111m |
| Share paid back out | 95% | 81% |
The revenue and expense figures there are KPMG's; the gap and the percentages are ours. Company by company it gets messier: AIA New Zealand's policy revenue rose $38 million and its claims and policy costs fell $10 million, yet it paid $101 million more for reinsurance. A sector total does not tell you what any single insurer did.
Why is health cover the opposite story?
The money coming in to health insurers grew 15% in the same report, three times as fast as life, from $2,309 million to $2,666 million. It still was not enough. They paid out $2,747 million, which is 103 cents for every dollar they took in, and lost $80 million between them. That beats the $115 million loss of the year before, but it is still a loss.
Southern Cross is 74% of the health market by revenue. It paid out $2,014 million against $1,966 million collected, lost $46 million, and covered the difference from its reserves, the buffer built up over the years. Leaning on reserves like that "is not sustainable longer term", the same report says, and medical costs are rising about 15% a year, so the pressure does not ease on its own.
This is what each of the three sectors kept from every dollar coming in, after claims and policy costs:
| Sector, 2024/25 | Cents kept per dollar coming in |
|---|---|
| General insurance, such as car and house | 35c |
| Life insurance | 17c, up from 14c |
| Health insurance | minus 3c |
Our inversion of KPMG's published expense ratios of 65%, 83% and 103%.
Plenty of households hold both, sometimes with the same group. Last year the life half of the industry widened its margin while the health half leaned on reserves that cannot keep absorbing the gap. Your next health insurance renewal and the margin inside your life premium are two ends of the same industry.
What does this mean for my cover?
Nothing in this report changes your policy wording or the cover you already hold.
Most life cover in New Zealand is sold on stepped premiums, meaning the price rises each year as you get older. Across the sector last year, the price of that cover ran well ahead of the cost of claims, so there is more room in it than usual for a competing insurer to undercut. That makes a stronger case than normal for comparing life insurance prices rather than renewing with the same insurer out of habit.
One product line is the exception. Income protection, which insurers call disability income cover, pays a monthly amount if illness or injury stops you working. The same report says claims stayed "at elevated levels, particularly in relation to disability income and health insurance products", with more claims coming in and each one lasting longer, partly because of the economy. So if you hold income protection, that is the one line where insurers really are paying out more, and a price rise there is easier to justify than one on plain life cover.
On health cover, KPMG expects Southern Cross to use "most likely a combination" of premium increases and cost control. Across that market, expect all three of the moves above to keep coming.
What can't this report tell me?
KPMG does not print a day-level publication date. June 2026 comes from its file path and landing page, and our 1 June 2026 date rests on that.
The year labels are not calendar years. Each insurer contributes its own financial year, so one sector total stacks up slightly different twelve-month windows.
Under IFRS 17, the accounting rulebook insurers must follow, insurance revenue is not the cash they collected. It is revenue recognised for cover provided during the year. So "per dollar coming in" here is close to what policyholders paid, not exactly it.
Insurance expense mixes claims with other costs tied to running policies, and the report publishes no pure claims number. So the 1% growth is not claims alone.
Profit before tax also includes investment returns and other items the report does not split out, so part of the 47% may be investment performance rather than insurance. In both years those items were a net drag, and KPMG does not say what they were.
The sector total includes life reinsurers such as Swiss Re Life, so some of that revenue is one insurer paying another rather than a household paying a premium.
KPMG's company lists are its pick of the biggest movements, not a full table, so there are insurers we cannot do the Partners Life sum for.
What this means for your cover
Financial strength, published benefit limits and who underwrites which brand, side by side. Compare New Zealand insurers
Sources
Every source below was read and checked on 21 August 2026.
- New Zealand Insurance Update 2026, KPMG New Zealand, June 2026
- New Zealand Insurance Update 2026, full report PDF, KPMG New Zealand, June 2026
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Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, Claims Support.