It’s only by understanding people’s needs that the insurance sector can help close the gap between public and private healthcare, writes Katrina Shanks.


In many ways, living through this pandemic seems to have given us all a whole different level of awareness about our own health and wellbeing, and the importance of being able to access medical services when needed.

In this spirit, we recently hosted a webinar with Stephen Potter and John Mayhew, AIA’s chief underwriter and chief medical officer respectively, focusing on changing health trends and the role of insurance in improving Kiwis’ medical outcomes.

How Kiwis’ health has changed

In line with global statistics, New Zealanders are living longer lives than ever before, and according to Stats NZ, the gap between men’s and women’s life expectancy is also narrowing.

There are many different reasons behind this trend, as Stephen and John’s presentation highlighted, including positive public health measures, significant medical advances, and individual healthcare improvements.

Compared to 20 or 30 years ago, we now have access to healthier housing, cleaner water, and sewage handling. We also have better treatments and screening programmes, thanks to technological advances that are nothing short of revolutionary.

And at an individual level, though more can always be done, we’ve gained a clearer understanding of how our lifestyle choices affect our well-being in the long run – like looking after our mental health, exercising, or following a well-balanced diet.

As a result of it all, conditions that were common only a few decades ago have either become curable (like hepatitis C), manageable (HIV), more preventable and less disruptive overall (heart attacks and strokes), or largely disappeared thanks to vaccination (polio, measles etc.). At the same time, however, health issues related to old age – like neurodegenerative conditions – have become more and more salient.

So, what does it all mean for our healthcare system, and from an insurance standpoint? That’s the challenge that insurers all over the world are trying to tackle.

A healthcare system under pressure

Longer lifespans are a success story for humanity, but moving from ageing to successful longevity poses new challenges for global economies and healthcare systems.

As John Mayhew put it during our webinar, treatment of many age-related conditions is very expensive, and with Pharmac working on limited resources, the risk is for our health funding resources to disproportionately shift towards older patients’ needs.

According a 2020 report from the World Health Organization (“How will population ageing affect health expenditure trends in New Zealand, and what are the implications if people age in good health?”), the individual health spending of an average 80-year-old is over seven times higher than for an average 20-year-old. And WHO data shows that our population is ageing.

In 2020 an estimated 16.4% of New Zealanders were over 65 years old, compared to 8.6% in 1960. And by 2060, this proportion is expected to reach 25.9%. While deaths of heart disease have declined, the mortality rate from conditions such as dementia, Alzheimer’s and Parkinson’s disease have increased. And 2013 Ministry of Health data highlights that, although Kiwis are living longer, less of this time is spent in good health.

Based on this data, the next question is: what will be the likely impact of population ageing on healthcare expenditure? It’s too early to tell, but according to the WHO, it will largely depend on whether people will age in good health. If so, population ageing may actually contribute only modestly to health spending growth, compared to other factors like rising technology and medical costs.

It’s a reminder of the importance of promoting healthy lifestyle habits for prevention of future disease. And this is another key area of focus for insurers worldwide.

Tackling future challenges

During our webinar, AIA’s Stephen Potter talked about the challenges that insurers face considering changing health needs and consumer expectations.

Technology and medical advances have raised new questions in terms of product design, underwriting guidelines, claims management and pricing. Medical advances have proven that many assumptions that were once widespread are no longer relevant, forcing underwriting to evolve rapidly in today’s marketplace. And from a product standpoint, insurers are reassessing definitions to match illness treatment and severity.

Now, the key challenge for the insurance sector is to keep pace with these changes. On the one hand, insurers are looking for more efficient ways to bridge the gap between Kiwis’ evolving medical needs and what the public healthcare system can sustainably offer. On the other, they’re also finding evidence that prevention is the best cure for many conditions.

With this in mind, it’s evident that insurance is not just a simple product, it’s a solution – much like the adviser-client relationship is not a one-off transaction but rather a relationship.

It’s only by understanding people’s needs that the insurance sector can help bridge the gap between those needs and what the public healthcare system can sustainably offer. And it’s only by considering Kiwis’ health as a whole that our industry can encourage better health outcomes.

The future is full of promising breakthroughs, and innovations that may not only help us live longer lives, but also healthier and more fulfilling ones. And as members of the insurance industry, by making healthcare accessible to all people who need it, we can make a difference.

Here to help

Financial Advice NZ’s ever-growing library of webcasts are available in its members’ section.

Financial Advice NZ was founded with a single-minded purpose: to help New Zealanders, and New Zealand as a whole, be financially better off.