Removing FBT on insurance would cut premiums, FSC says
The FSC is calling for changes to Fringe Benefit Tax rules, arguing the current settings discourage businesses from offering health and life insurance to employees.
Monday, December 15th 2025, 4:03PM
The Financial Services Council (FSC) is continuing to call for changes to Fringe Benefit Tax (FBT) rules to make health and life insurance more accessible to New Zealand workers.
It wants the government to exempt employer-provided health and life insurance from FBT, arguing the current tax setting discourages businesses from offering cover as part of employee benefits packages.
FSC chief executive Kirk Hope says removing the tax would be a win-win.
"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," Hope told RNZ's The Panel.
"What that would also do is alleviate some of the pressure in the public system, because you're taking people out of that system that might be on wait lists, for example."
The push comes as research shows New Zealanders are twice as likely to insure their cars than themselves. The FSC's June 2025 report found 78% of people with life insurance and 56% with health insurance pay for it out of their own pockets rather than receiving it through work.
Hope says FBT particularly discourages small and medium-sized businesses from including insurance in remuneration packages.
"For families, you get people back into work more quickly because they can get their issue fixed without sitting on a wait list for two years. It's a little more nuanced than just giving a tax break," he says.
The FSC research also found cost of living pressures are the main reason people cancel or avoid insurance, though life and health policies are less likely to be dropped than other types of cover.
The council is engaging with ministers and policymakers to advocate for the tax change.
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