Medical costs in New Zealand have increased significantly, positioning the country among those with the highest medical inflation rates in the Asia-Pacific (APAC) region and worldwide, according to Aon plc’s 2025 Global Medical Trend Rates Report.
The report, which assessed the percentage change in employer-sponsored medical plan costs annually, provided forecasts for 112 countries.
It found that New Zealand’s medical trend rate rose from 7.4% in 2024 to a whopping 14.5% in 2025, making it one of the largest increases recorded. Within the APAC region, only Kazakhstan had a higher rate at 22%. Other countries in the region with elevated medical trend rates included Papua New Guinea, Thailand, and Vietnam.
On a global scale, Aon projected a 10% average medical trend rate for 2025, following a peak of 10.1% in 2024 – the highest in the last decade. APAC and North America are expected to see the most significant increases, at 11.1% and 8.8%, respectively.
Aon New Zealand’s health leader, Anson Davies, pointed to a combination of factors driving costs higher, including increased claims activity and the delayed effects of the COVID-19 pandemic.
“In 2024, there was a larger-than-expected rise in claimable events and procedures, which had a sizable effect on the industry. The long-awaited impact of COVID-19 was also finally felt, as many policyholders caught up on delayed healthcare from 2020 to 2023,” he said.
He also noted that broader inflationary pressures have influenced healthcare costs, with general inflation remaining high in New Zealand during 2023-24. Additionally, constraints in the public healthcare system have contributed to a shift towards private healthcare, further accelerating medical cost inflation.
The Aon report aligns with a 2024 study by the Financial Services Council (FSC) of New Zealand, which examined financial risks related to life and health insurance. It identified rising living costs as a key factor influencing insurance decisions, with affordability being a primary concern. It also highlighted gaps in financial knowledge and preparedness. Nearly 45% of respondents indicated they lacked a clear understanding of the relationship between financial risk and return.
Aon’s 2025 Global Medical Trend Rates Report also identified several global trends driving medical costs, including:
To address rising costs, employers are implementing strategies such as changes to plan design, alternative financing options, and greater use of data analytics to manage medical expenses while supporting employee health.
“Taking into account these rising medical trends, it’s vital that employers, policymakers and insurers collaborate to find sustainable healthcare solutions that balance quality care and cost,” Davies said.
Aon’s findings were compiled based on insights from 112 Aon offices advising on employer-sponsored medical plans globally, offering a perspective on cost trends and risk management strategies.
