When people see their insurance premiums increase, age is often assumed to be the main reason.
While age does play a role in how insurance is priced, it’s only one of several factors. Premiums reflect not just individual circumstances, but also broader trends in claims, underlying costs, and how the insurance system operates over time. These factors can influence price changes in ways that aren’t always obvious from the outside.
Age is only part of the picture
It’s true that as people get older, insurers typically expect a higher likelihood of certain health events and claims. This expectation is part of how risk is assessed. However, age is only one of many elements insurers consider when setting or adjusting premiums.
Claims experience across the system
One major influence on pricing is how much insurers are paying out in claims, not just in number, but in cost and complexity.
If claims across a wide range of policyholders are higher than expected, this can increase the overall cost of providing cover. When this happens for an extended period, insurers may adjust premiums to help ensure they can continue to meet future claims without jeopardising the long-term sustainability of policies.
Rising cost of medical treatment
Healthcare costs in New Zealand have been rising, reflecting a combination of general inflation, more advanced treatments and greater demand for services. These underlying cost pressures affect how much insurers pay when policyholders claim for medical-related events, which feeds into overall claims costs that pricing models reflect.
Reinsurance and cost pressures
Insurers purchase reinsurance to help manage risk from large, unpredicted claim events. The cost and availability of reinsurance are influenced by global market conditions. When reinsurance becomes more expensive or harder to secure, those costs can flow through to local pricing considerations.
Policy design and features matter
Different insurance products have different features, benefits and definitions. Some are broader or more generous in what they cover, which can result in higher ongoing costs to provide that cover. This is one reason two superficially similar policies can experience different pricing movements over time.
Shifting risk trends
Insurance pricing also reflects evolving patterns in the broader population. For example, changes in how often certain conditions occur, or how long claims last. These trends can change how insurers project future claims experience, which in turn influences pricing assumptions.
Premiums can vary for different policyholders
Because pricing reflects a blend of many factors — product design, risk profile, claims trends and broader cost pressures — changes in premiums can vary widely between different individuals and policy types.
Understanding pricing helps set expectations
Insurance is designed to provide financial protection over the long term. Premiums are structured to ensure that protection remains available and sustainable across many years and many policyholders.
Knowing that factors beyond age, such as claims experience, treatment costs and market pressures, also influence pricing can help people make sense of premium changes without assuming there’s a single cause.
Like to talk?
Because insurance pricing is influenced by a mix of personal factors and wider industry trends, it can sometimes feel difficult to understand why premiums change over time. Having a conversation with your insurance adviser can help put these changes into context, explain how your cover works in practice, and ensure you have a clear understanding of your options as your circumstances evolve.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.