Health insurance has displaced house and motor vehicle cover as the single largest source of formal insurance disputes in New Zealand – and the complaints are concentrated where broker advice matters most: exclusions, benefit limits, and policy changes policyholders do not understand until they file a claim.
That finding leads the annual figures released September 24 by the Insurance & Financial Services Ombudsman Scheme (IFSO Scheme), covering the year ended June 30, 2026.
The scheme completed 833 dispute investigations during the year – a record, and a 46% increase on the prior year.
The scale of that shift becomes clear against the IFSO Scheme’s own 2022 annual report, which recorded 285 completed investigations. Four years on, that number has nearly tripled. Across the full five-year period from 2022 to 2026, dispute volumes have risen close to 190%.
This happened without a major natural disaster pushing volumes – historically one of the primary triggers for complaint surges in New Zealand.
“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,” said Insurance & Financial Services Ombudsman Karen Stevens.
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Stevens identified the growing use of AI tools to file complaints as a contributing factor to rising volumes – and it carries direct implications for advisers. “We are also seeing growing use of AI tools to make complaints, which have had an impact on the volumes we’re receiving,” she said.
Clients who previously accepted a declined claim may now escalate more readily, equipped with a structured submission they lacked the time or confidence to produce before. For advisers, this raises the stakes around documentation. Clearly recorded conversations and upfront discussion of policy limitations are a more important professional safeguard than they were even a few years ago.
Health insurance disputes rose 91% year-on-year. Across all investigations, the most common issues were scope of cover and policy exclusions – not claims handling delays or administrative failures.
Stevens connected the surge to cost pressures and the strain on New Zealand’s public health system. “Rising healthcare costs and increasing pressure on the health system are probably contributing to the high number of health insurance disputes. 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,” she said.
The complaints arrive in a market where product terms have shifted materially. In late 2025, nib NZ announced changes effective November 24, 2025 – including a 20% co-payment on specialist consultations and diagnostic tests not listed in its Diagnostics Schedule and the removal of the Loyalty Check-Up Benefit, Public Hospital Payment Benefit, Loyalty Active Wellness Benefit, and Cover in Australia Benefit from selected policies – according to Chatswood, an industry consultancy that publishes adviser-facing updates. The Ultimate Health Max product remained unchanged due to its guaranteed wording.
Whether those changes were communicated clearly at renewal, and whether advisers discussed the practical implications with clients, sits directly in the frame of disputes the IFSO Scheme is recording.
Official data provides context. According to the New Zealand government, 64.9% of patients received elective treatment within four months in the January to March 2026 quarter, against a government target of 95%.
Health New Zealand’s health targets performance resources for Quarter 3 2025/26 show 196,006 people on the first specialist assessment waitlist as of March 31, 2026, with more than 76,000 past the four-month mark.
The gap between system capacity and patient need pushes more people toward private health cover. When those policies fall short of expectations at claim time, disputes follow.
On cost, Aon’s 2026 Global Medical Trend Rates Report projects medical plan costs in New Zealand will rise 18% in 2026, up from 17% in 2025 – nearly double the Asia-Pacific regional average of 11.3% and well above the global figure of 9.8%.
The IFSO figures land in the middle of a sharpening regulatory focus. The Financial Markets Authority’s (FMA) Financial Conduct Report for 2026/27, published June 30, 2026, names complaints handling as one of three insurer-specific priorities for the year ahead, alongside product design and fraud detection. From its 2025/26 monitoring, the FMA found that only some insurers maintain comprehensive complaints policies that are regularly reviewed, and that use of complaints data to drive product improvements remains inconsistent across the sector.
The regulator’s position is that complaints trends should be treated as a material input into product and service decisions – not a standalone compliance task.
Travel insurance complaints rose 32% during the year. A portion were linked to disruptions caused by conflict in the Middle East, alongside disagreements over what policies covered when trips were affected.
One case involved a traveller in India who could not proceed to Dubai after regional airspace closures. He claimed for pre-booked flights, accommodation, and activities. The insurer declined, citing a policy exclusion for losses arising directly or indirectly from acts of war. The IFSO Scheme found the insurer had applied the policy terms correctly.
“This dispute highlights the importance of understanding policy exclusions and checking what events may not be covered before travelling,” Stevens said.
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Stevens was direct about the limits of the process – relevant for advisers managing client expectations after a declined claim.
“Because we can’t change the law or rewrite their contracts, we often cannot give consumers the outcome they’re hoping for. If no cover exists under the policy they took out, we can’t change that,” she said.
The scheme handled 3,977 total cases during the year, including 2,602 complaints. More than 92% of accepted disputes were insurance-related. The average investigation took 46 days, and consumer payments for the year totalled more than $1.39 million.
