A new survey of New Zealand workers has produced one finding that sits directly on the group risk broker’s desk: employees rank health insurance as the benefit they value most, yet fewer than three in 10 are offered it through their employer. Read alongside current data on individual cover attrition and the tax treatment of group schemes, that gap represents a concrete and time-relevant placement opportunity. The 2026 Cultivate Workplace Benefits Report, based on responses from 1,003 employed New Zealanders surveyed in mid-2026, found that approximately 27% of respondents are offered health insurance through work – despite it ranking as the most valued individual benefit named by workers. Only 19% describe their current benefits package as genuinely valuable and well matched to their needs.
The employer provision gap does not exist in isolation. Financial Services Council (FSC) research published in 2025 found that the majority of New Zealanders with health insurance pay for it themselves rather than through an employer-provided scheme, with 56% of health insurance policyholders individually funded. The research also identified the rising cost of living as the leading reason New Zealanders cancel or avoid insurance, highlighting the affordability pressure facing individually funded cover.
According to Insurance Business New Zealand, citing FSC-commissioned research, 9% of people with health insurance terminated their policies in 2025, up from 7% in 2022. Separately, the average health insurance claim paid per member rose from $1,097 in 2021 to $1,921 in 2025 – nearly doubling in four years. Over the same period, premiums climbed almost 75%. FSC chief executive Kirk Hope said: “Just as New Zealand needs every part of the health system working better together, people are cutting back the very cover that helps them access care sooner.” That attrition at the individual level is the market context in which the Cultivate data lands. Workers are losing cover they want; employers who offer group schemes represent a more durable vehicle for maintaining it. The group scheme model distributes risk across a pool, often attracts employer subsidies, and is structurally less exposed to the individual premium escalation that is driving cancellations.
New Zealand's largest health insurer, Southern Cross Health Insurance, published its FY2025 annual results in September 2025 showing that nearly 40% of its approximately 950,000 members are part of a subsidised group scheme offered by 2,600 employers. Southern Cross CEO Nick Astwick said the value of health insurance was “becoming increasingly more relevant for individual policyholders and the more than two and a half thousand New Zealand businesses who offer subsidised Southern Cross Health Insurance to their employees.”
The figures illustrate the significance of the workplace channel in New Zealand’s private health insurance market. Southern Cross reported that nearly two in five of its members were covered through subsidised group schemes in FY2025, indicating that employer-sponsored cover is already a substantial part of the market. The Cultivate survey, meanwhile, suggests that access to employer-provided health insurance is not universal among workers, with around 27% of respondents saying it is offered through their workplace.
One structural factor that can affect the cost of employer-provided health insurance is fringe benefit tax (FBT). Under New Zealand’s current rules, where an employer takes out a health or life insurance policy for an employee and pays the premiums, the benefit can be subject to FBT. Inland Revenue’s single FBT rate is 63.93% – the simplest calculation method for employers to administer, though not necessarily the lowest-cost option, as employers may pay less tax under alternative attribution methods depending on their workforce composition.
The FSC has been explicit in calling for the government to remove FBT from employer-provided health and life insurance. Hope told RNZ: “Our argument is – remove fringe benefit tax for employer group schemes, because what we know is that more employers would offer them. That would actually reduce the price of premiums, because you’re expanding the market. That would make health insurance more affordable and more accessible.”
Inland Revenue launched public consultation on proposals to review New Zealand’s FBT regime in April 2025, with the changes largely aimed at simplifying the rules and reducing compliance costs. Motor vehicles were a major focus of the review. While the consultation considered a range of FBT issues, it did not propose an exemption for employer-provided health or life insurance. The FSC’s Prosperity Agenda election manifesto, launched July 30, 2026, subsequently called for FBT to be removed from employer-provided life and health insurance. No such exemption has been enacted. For brokers, that legislative gap is a practical tool. An employer that has not offered group health cover because of perceived cost complexity has a concrete and current explanation for their hesitation – and an informed adviser can reframe the FBT conversation around actual cost modelling rather than the single rate assumption most employers carry.
The Cultivate report’s findings on health insurance demand sit within a broader shift in how workers are weighing benefits. Six in 10 respondents say their base salary has fallen behind the cost of living over the past three years, and 36% say benefits matter more to how they value a job than they did three years ago – against just 4% who say less. That shift extends to workers whose pay has kept pace with inflation: 28% of that group reports the same change. “Benefits are being asked to carry more weight, and a lot of them aren’t landing. It isn’t just that employers aren’t spending. It’s that a lot of what they do spend is aimed at the wrong target,” said Tony Pownall, co-CEO of Cultivate.
When asked which type of benefit they would most value, 18% of respondents nominated protection benefits – covering health insurance, income protection, and life insurance — placing third behind time and flexibility at 39% and cost reduction at 20%. That ordering matters for how brokers position group schemes in an employer conversation: health insurance lands as a protection benefit, but its retention and recruitment value maps onto the time and cost concerns that workers name first. “When your pay hasn’t kept up with the weekly shop, a benefit that gives you time back with your family, or takes a cost off your plate, lands very differently to a gym discount,” said Trina Jones, co-CEO of Cultivate.
