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'Everyday' policies attracting young consumers

A new category of “everyday” comprehensive health products is getting the credit for an increase in the number of 25- to 35-year-olds with health insurance in the December quarter.

Wednesday, February 11th 2015, 6:00AM 5 Comments

The overall number of New Zealanders with health insurance rose in the quarter by 1000, to 1.333 million. But there was an increase of almost 3000 in the younger age group in the quarter.

Health Funds Association NZ chief executive Roger Styles welcomed the figures, saying the number of lives covered had been relatively static for the past five quarters.

He said this reflected the country’s economic stability and New Zealanders’ understanding that they would need to fund some of their future healthcare costs themselves.

Styles said the increase in the 25- to 35-year-old age bracket was possibly as a result of concentrated efforts by some insurers to attract a younger demographic with less expensive policies that provide cover for day-to-day health costs such as GP visits, physiotherapy, dental check-ups and glasses.

“The increase in younger people taking out health insurance is very pleasing because it indicates that they recognise the value of getting in early, before the onset of pre-existing conditions, to safeguard themselves for the future,” he said.

The over-65 age group also recorded an increase, largely due to the ageing population. The 35-49 age group has seen a much smaller decline over the past year than in previous years.

Styles said the statistics showed a sizeable number of New Zealanders appreciated the value of health insurance.

For the year to the end of December, lives covered dropped 2600, or 0.2%, the lowest recorded annual decline since September 2009.

Claims paid for the December 2014 quarter were $255.6 million, up 5.5% on the previous December 2013 quarter. Total claims paid for the year to December 31 were $989 million, up 4.8% on the previous year.

Premium income for the December 2014 quarter totalled $310 million, up $5.3 million or 1.7% on the September 2014 quarter. Annual premium for the year to the end of December was $1.21 billion, up 5.9% or $68 million on the December 2013 year.

The past year has seen a decrease in the number of lives covered by comprehensive health insurance (-9100), although there has been an increase in lives covered by elective surgical and specialist policies (+6500). Elective surgical policies continue to increase as a proportion of policies, now accounting for 67.5 percent of lives covered.

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Comments from our readers

On 17 February 2015 at 3:26 pm LNF said:
Styles said "they recognise the value of getting in early, before the onset of pre-existing conditions, to safeguard themselves for the future,” Excuse me they haven't yet insured the area that is really affected by pre-existing conditions. That will all kick in when they seek to expand their cover
This from the HFANZ CEO. Do you have any idea what you are talking about
On 19 February 2015 at 5:05 pm Broker said:
I really struggle to see how these policies add any value at all...just adds confusion for the consumer and is undoing what us advisers do in the way of educating people to insure for the big ticket items, not day to day sundry health costs...
On 22 February 2015 at 5:41 pm Mike Naylor said:
These cash-flow policies break all the insurance principles, as they cover small events and leave the client exposed to large events.
HOWEVER - if these policies are aimed to young people who would not be insured otherwise they could be useful. (i) these youngsters may have cash-flow problems and the policies pre-pay health cover, so encourage them to go to the doctor. (ii) they may get clients used to buying insurance and hopefully they will upgrade to a proper policy when they are older.
The effect would be better if the insurers used the policy as a reason to get the client in front of an adviser, so they can get some decent advise.
As for Roger Styles - maybe he was having a rushed day and didn't really think about what he was saying?
On 23 February 2015 at 9:40 am Broker said:
I agree with you Mike to the point where the youngsters will upgrade to a better policy later on. They won't because they think they already have medical insurance and will decline any appointment to review/upgrade their medical as they think 'it's sorted'...until they find they need to claim on something serious and it's not covered...these policies are like insuring your car tyres and not your car...
On 23 February 2015 at 10:18 am regant said:
It is not pleasing at all to see growth in the 25- to 35-year-old age bracket as a result of concentrated efforts by some insurers to attract a younger demographic by cutting out advisers in favour of direct marketing and by promoting valueless policies which have serious risk of causing widespread resentment.

Just wait until the media has articles about the guy who thought he had bought insurance for but it didnt cover him when he really needed it.

Naylor has a point, but these cheap policies dont have provisions such as guaranteed future health insurance upgrades, conversion options etc which means the false sense of security they provide, and the resulting reluctance to speak with an adviser let alone upgrade to actual health insurance could in fact be worse than not having got the good stuff in the first place.

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