Health insurance has become the biggest source of disputes investigated by New Zealand’s Insurance and Financial Services Ombudsman Scheme, overtaking house and car insurance for the first time in the scheme’s history.
The scheme’s results for the year to June 2026, reported by RNZ on Thursday, show health insurance disputes rose 91 percent on the year before. The ombudsman completed a record 833 dispute investigations, up 46 percent, and handled 3977 cases in all, including 2602 complaints.
More than 92 percent of the disputes the scheme accepted involved insurance. Consumers received more than $1.39 million in payments through the scheme during the year, and disputes took an average of 46 days to investigate and close.
Ombudsman Karen Stevens said the rising cost of healthcare and the pressure on the public health system were probably behind the jump in health cover disputes. Most of the fights were not about whether someone was insured at all, but about what the fine print covered.
“Many of the disputes we considered involved disagreements about policy exclusions, benefit eligibility, limits, or changes to policy terms. Consumers generally do not realise how those factors affect their cover until they need to make a claim,” Stevens said.
That pattern will be familiar to anyone who has read a health policy wording closely. A policy can look comprehensive on the sales page and still carry caps on particular treatments, waiting periods, exclusions for conditions a person already had, or terms that shift when the insurer updates its product. People tend to find those limits at the worst possible moment, after a diagnosis and with a specialist’s quote in hand.
The rise is not being driven by a disaster. In earlier years, spikes in insurance complaints tended to follow floods, storms and earthquakes, when thousands of home and car claims hit insurers at once. Stevens said the current surge had a different cause.
“While there have been no recent major natural disasters driving complaint volumes, we continue to see record levels of disputes coming to the IFSO Scheme,” she said. She put the demand for dispute resolution down to ongoing financial pressure on households.
The longer trend is steep. According to B2B News, the number of disputes the scheme completed has roughly tripled from 285 in 2022 to 833 this year. Health, life and disability cover made up 21 percent of disputes in 2023/24 and 29 percent in 2024/25, before health alone moved into first place this year. The same report puts the number of New Zealanders with health insurance at about 1.45 million, or 37 percent of the population, many of them through a workplace scheme.
The disputes figures sit alongside a squeeze on the health insurance market itself. In August the Financial Services Council released a report showing the average claim paid per member had risen 75 percent since 2021, while a growing share of policyholders were cancelling their cover. Higher claims push premiums up, higher premiums push healthier members out, and the people who stay are the ones most likely to claim. Every one of those claims is a chance for a disagreement about what the policy actually says.
Travel insurance was the other big mover. Disputes over travel cover rose 32 percent over the year. Some were linked to disruption caused by conflict in the Middle East, while others turned on exclusions and how far cover extended. In July the Ministry of Foreign Affairs and Trade raised its travel advisory for several Gulf states, reopening questions about conflict exclusions in many policies.
Stevens said one travel case the scheme dealt with showed “the importance of understanding policy exclusions and checking what events may not be covered before travelling.”
The ombudsman’s numbers match what other complaint bodies are seeing. Financial Services Complaints Limited, a separate dispute scheme that covers many lenders, KiwiSaver providers and some insurers, reported in July that it had investigated 532 disputes in 2025/26, up 49 percent and its highest since it was set up in 2010. Its disputes over KiwiSaver hardship withdrawals rose sharply as people in financial trouble tried to get at their retirement savings.
Regulators have noticed. The Financial Markets Authority has named complaints handling as one of its insurance priorities for 2026/27, alongside product design and fraud detection, after finding that only some insurers had thorough complaints policies and that the industry made patchy use of complaints data to fix its products. The FMA has singled out travel insurance as one of the most complained-about products in the market.
For consumers, the ombudsman’s service is free. A person with a complaint must first go through their insurer’s own internal complaints process, and if it is not resolved they can take it to whichever dispute scheme the insurer belongs to. The ombudsman can make binding decisions against a member company up to a set limit, though the consumer is not bound and can still go to court.
The practical lesson from the figures is an old one. Before a claim, read the exclusions, the benefit limits and any letters about changed terms, and ask the insurer or an adviser in writing what is and is not covered. With 1.45 million New Zealanders holding health cover and premiums climbing, the gap between what people think they bought and what the policy pays is turning into one of the country’s fastest-growing consumer problems.
Have you had a health or travel insurance claim turned down, or taken a dispute to the ombudsman? Share your experience in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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