Report
Eight insurers must show the Reserve Bank what would break them, and for the first time health insurers are on the list
Source: RBNZ, 2026 Banking and Insurance Stress Tests - Scenarios
The Reserve Bank has told the 5 largest life insurers and the 3 largest health insurers to work backwards from their own failure and describe what would get them there. It has not named the eight. Their own public statements do, and the findings land late in 2026.
By Henry Smith · Insurers · 2026-06-30
What this means for you Late in 2026 the Reserve Bank will publish what the eight biggest life and health insurers say could push them below their legal capital cushion, the first exercise of its kind to include health cover. The sharper signal sits with health: the regulator is now formally testing whether a sector that has raised premiums 15 to 30 percent in two years can keep absorbing claims growth.
The Reserve Bank has told eight insurers to work out exactly what would break them. Five are life insurers. Three are health insurers, and that is the first time health cover has been included.
The exercise is called a reverse stress test. A normal stress test hands every insurer the same imagined disaster and asks how well they survive it. This one fixes the ending instead. The ending is fixed: the insurer's spare capital falls below the legal minimum. That cushion is called the solvency margin. Each insurer works backwards and writes the severe but believable chain of events that gets it there. Answers were due in July. The Bank publishes what it has learned in the last three months of 2026 (RBNZ, June 2026, retrieved 20 August 2026).
The Bank has not said which eight. We work out who they are below, from the insurers' own public statements. That list is ours, not the regulator's.
What did the Reserve Bank actually ask for?
The Bank set out its 2026 stress tests in a June edition of its Bulletin, its research series (RBNZ, retrieved 20 August 2026). Banks were handed a script. The 4 largest model a Middle East conflict, run jointly with APRA, Australia's banking regulator. The 9 smaller banks each model a crisis of confidence in themselves (same source).
Insurers got no script. The 8 taking part "represent a majority of New Zealand's life and health insurance sectors". The Bank gave them design rules and let them invent their own disaster. Health insurers got tighter instructions, because of "ongoing concerns that claims costs may increase at a rate exceeding wage growth and general inflation". That trend, the Bank says, "may place sustained pressure on profitability and create uncertainty regarding the adequacy and acceptability of premium increases for policyholders and employers" (RBNZ, retrieved 20 August 2026).
The Bank's three-year testing plan, published on 13 April 2026, sets the guest list. It covers "the five largest life insurers that participated in the inaugural 2022 Life Insurance Industry Stress Test, plus the three largest health insurers for the first time" (RBNZ, retrieved 20 August 2026).
So who are the eight?
The five life seats are already public
No detective work needed. The 2026 plan says the life panel is whoever took part in the 2022 life insurance test, and the Bank's write-up of that test names them: "AIA, Asteron Life, Chubb Life, Fidelity Life and Partners Life" (RBNZ, retrieved 20 August 2026).
The three health insurers name themselves
Southern Cross calls itself "New Zealand's largest health insurer", with 951,808 members (Southern Cross, 30 September 2025, retrieved 20 August 2026).
UniMed announced in June 2024 that it had become "New Zealand's third largest health insurer, with 10% of the market and more than 140,000 members" after taking on Accuro's customers (UniMed via Scoop, retrieved 20 August 2026).
First and third are taken, so one seat sits between them. nib publishes no rank, but its size settles it. nib's New Zealand health business collected $218.0 million from customers in six months (nib, retrieved 20 August 2026). That is far more than UniMed, and far short of the $1.811 billion Southern Cross collects in a full year (Southern Cross, 30 September 2025, retrieved 20 August 2026).
| Panel seat | Insurer | Why we put them there |
|---|---|---|
| Life, all five | AIA, Asteron Life, Chubb Life, Fidelity Life, Partners Life | Named by the Bank as the 2022 participants, and the 2026 plan says those are the life panel (RBNZ, retrieved 20 August 2026) |
| Health, largest | Southern Cross | Calls itself the largest, 951,808 members (Southern Cross, 30 September 2025, retrieved 20 August 2026) |
| Health, second | nib, our inference | Publishes no rank. We place it by elimination and by size, on $218.0m collected in six months (nib, retrieved 20 August 2026) |
| Health, third | UniMed | Calls itself third largest, with 10% of the market and 140,000+ members (UniMed via Scoop, 5 June 2024, retrieved 20 August 2026) |
UniMed's figures show how much of the country this panel covers. If 140,000 members is 10% of the market, the whole market is roughly 1.4 million insured people. Southern Cross and UniMed together account for about 78% of it, before nib is counted. That is our arithmetic on the insurers' published figures.
What did the last stress test find?
The 2022 test ran the usual way round. Every life insurer got the same scenario: an economic shock plus an insurance shock built from long COVID and a new pandemic. All five stayed solvent. But by year three their combined solvency margin was "over 50% lower" than in normal conditions, while still sitting "well above the regulatory minimum of zero" (RBNZ, retrieved 20 August 2026).
Put the two side by side and the change in method is the story. 2022 showed that a brutal shared storm burns through roughly half the sector's cushion. 2026 asks each insurer to invent the storm that burns all of it, because every insurer breaks in a different place.
The Bank tried this on banks in 2024, and those results hint at what is coming. Several found that no single event broke them, only a combination did. Most included a geopolitical event in their scenario (RBNZ, November 2024, retrieved 20 August 2026). Expect the insurers' answers to look similar: chains of events, not one disaster.
Why are the health insurers the real target?
The sector's own numbers explain the tighter instructions. The Reserve Bank's Financial Stability Report, its twice-yearly check-up on the financial system, records that health insurers "have each increased premiums by 15 to 30 percent over the last 2 years". The Bank has also put the sector under "a period of more intensive supervision", meaning closer and more frequent scrutiny, a step it flagged in November 2025 (RBNZ, May 2026, retrieved 20 August 2026).
Compound those rises and the pressure is easy to state. A 15% increase spread over two years is about 7.2% a year. Keep that up and premiums double in roughly ten years.
At the top of the Bank's range, 30% in two years, they double in just over five.
The insurers' own accounts show what is pushing premiums up.
| Insurer | What its accounts show |
|---|---|
| Southern Cross, 2025 financial year | Claims took 94 cents of every premium dollar: $1.706 billion paid out on $1.811 billion collected (Southern Cross, 30 September 2025, retrieved 20 August 2026) |
| Southern Cross, the bottom line | A $56.9 million shortfall on health insurance, about 3.1% of the premiums it collected, on our arithmetic (Southern Cross, 30 September 2025, retrieved 20 August 2026) |
| nib New Zealand, first half of 2025 | Premiums grew 12.1% to $218.0 million, yet its underlying result, which strips out one-offs, went from a $13.0 million profit to a $10.9 million loss (nib, retrieved 20 August 2026) |
| nib, what drove that | Claims costs rose 17.6%, and members used their cover 9.3% more than the year before (nib, retrieved 20 August 2026) |
The regulator is not asking health insurers to imagine some exotic catastrophe. The tighter instructions point at the slow one already running: claims growing faster than premiums can decently chase.
What happens to my policy?
Nothing. No policy changes because of this test. A modelled failure is the point of the exercise, not a prediction about any insurer. Three things still matter to you.
First, the late-2026 publication will be the frankest public statement yet on which risks the largest insurers believe could break them. That is a different lens from a financial strength rating, which grades an insurer as it stands today. Check where your insurer sits on our financial strength tool, then read the Bank's findings against it.
Second, if you hold or are comparing health insurance, the Bank has flagged a live question over whether customers and employers will keep accepting increases. Insurers are already responding by trimming benefits, negotiating harder with providers, and adding co-payments, where you pay a fixed share of a bill, plus ceilings on what they will pay for a given fee (RBNZ, May 2026, retrieved 20 August 2026). Expect that redesign to continue.
Third, on the life side, the same report singles out income protection sold to individuals as the biggest drag on the sector's returns, driven by rising mental health claims. The Bank expects insurers "to proactively assess the long-term sustainability" of those products (RBNZ, May 2026, retrieved 20 August 2026). If you hold income protection, that review is about the product you own.
What we could not check
The Reserve Bank's website blocked our direct retrieval with a 403 error. We read the Bulletin, the three-year plan, the May 2026 Financial Stability Report and the 2023 results bulletin through a text rendering of the same web addresses, and every quote is as it appeared there.
The Bulletin carries no publication date, and we found no dated listing or coverage of it. We can only place it in June 2026: after the May report said scenarios were coming, and before the July deadline.
The list of eight is ours, not the regulator's. No 2026 Reserve Bank document names a participant. Southern Cross and UniMed hold their seats on their own self-descriptions. nib's seat is our inference by elimination and size, because it publishes no rank. UniMed's 10% share and 140,000 members date from June 2024 and may have moved. AIA and Partners Life sell health cover too, so a seat could differ if the Bank ranked insurers across licence types, though both firms are on the panel as life insurers anyway.
The Bulletin does not say how the solvency outcome is defined for each insurer, which date's accounts are tested, or whether the late-2026 publication will name individual insurers or report only sector totals. The 2022 results were published as totals only. Our doubling-time sums assume the last two years' premium growth continues, which nobody has forecast.
Sources
- 2026 Banking and Insurance Stress Tests - Scenarios, RBNZ Bulletin, June 2026
- Three-year Stress Test Plan 2026 to 2028, RBNZ, 13 April 2026
- Financial Stability Report May 2026, RBNZ, May 2026
- Outcomes of our first Life Insurance Industry Stress Test, RBNZ Bulletin, 2023
- Exploring vulnerabilities through reverse stress testing, RBNZ Financial Stability Report, November 2024
- Delivering for members more than ever, Southern Cross, 30 September 2025
- UniMed now New Zealand's Third Largest Health Insurer, UniMed via Scoop, 5 June 2024
- nib NZ 1H25 result reflects challenging conditions, nib New Zealand, FY25 half year result
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