New Zealanders whose surgeon charges more than their health insurer will pay have nowhere to turn once the bill arrives, the insurance ombudsman has warned. Insurers are also less inclined than before to close that gap with goodwill payments.
Insurance and Financial Services Ombudsman Karen Stevens told RNZ's Nine to Noon that complaints over the shortfall were growing and were "a real worry". Her scheme cannot compel insurers to pay, and she said there is "no remedy for consumers who get stuck between a surgeon's costs and what their insurer is willing to pay for them".
The shortfall disputes sit inside a wider jump. Health insurance became the largest category of disputes to the IFSO Scheme for the first time in the year to June, up 91%. Part of that rise came from insurers relying on clauses that let them limit spending on a claim to what they deem "reasonable", and Stevens said there is fresh debate over how that word should be read.
Costs are pushing in the same direction. Stevens acknowledged that some surgery costs were "eye-watering" and had climbed considerably over the past few years. Aon's 2026 Global Medical Trend Rates Report projects medical plan costs in New Zealand will rise 18% this year, nearly double the Asia-Pacific average of 11.3%.
Disputes are also harder to resolve informally. Stevens said many complaints were once settled with an ex gratia payment, and insurers have pulled back from that.
"A lot of complaints you resolved with a goodwill payment, an ex gratia payment, the health insurers aren't as willing to do that as they used to be because from their perspective it affects all of their customers if they're paying claims outside of the terms and conditions of the policy," she said.
Stevens put the overall rise in complaints down to financial pressure and strain on the public health system. "It's about them wanting to have options and unfortunately, health insurance has tightened up in terms of what it used to be."
She said most people do not read their policies and assume they are covered. On products such as trauma, income protection and disability cover, she said clients benefit from working with an adviser. "They're really complicated products, and I'm not saying it's a complicated language but they're complicated products, and you often need help and you need to use somebody who actually is familiar with them and who can walk you through them."
For brokers and advisers handling health cover, the clause to check is the one that caps payment at what the insurer deems "reasonable". Without an ombudsman remedy for the shortfall, and with goodwill payments less likely, the gap between that cap and a specialist's quote now falls on the client. The point to find it is when surgery is being planned, before the claim is lodged.
