There are many reasons why insurance matters more than ever in New Zealand.

Insurance has always been a financial product that New Zealanders hope they will never need. Yet as economic pressures rise, healthcare costs increase, and households face growing financial uncertainty, insurance is becoming less of an optional extra and more a critical part of protecting what matters most long-term.

“For many New Zealanders, the conversation is shifting from protection to preservation: how to maintain financial stability and ensure access to the right support as health and financial needs evolve across a personal lifetime,” says Kristy Redfern, Chief Risk Officer and Executive Manager of Legal at Asteron Life in New Zealand.

For investors, and everyday households, the conversation around risk is changing. Insurance is no longer just about protecting physical assets after a natural disaster or accident. Increasingly, it is about protecting income and health and financial resilience in a world where uncertainty has become the norm.

Redfern who has worked across Australia, United Kingdom, the Middle East and New Zealand is of the opinion that the risks facing New Zealanders today are far broader and more complex than they were a decade ago.

Medical costs continue to rise, mortgage commitments remain high, and many kiwi families rely heavily on two incomes to meet everyday expenses. At the same time, people are living longer, but often there are longer recovery periods following illness or injury.

These trends are reshaping the insurance landscape.

Affordability factor

One of the biggest challenges facing the sector is affordability. Across New Zealand, households are under pressure from inflation, higher interest rates and increased living costs. Insurance premiums have also risen in many areas.

For many people, the temptation is to reduce cover or cancel policies altogether in order to save money in the short term. But financial advisers warn that doing so can expose households to significant long-term risk.

“We are seeing some people are scaling back cover due to affordability challenges. While understandable, this can create significant risk exposure. A more balanced approach might be adjusting excesses, or optional addons to optimise affordability rather than removing cover entirely,” says Redfern.

The reality is that unexpected events can derail even well-structured financial plans. Serious illness, disability, injury, or loss of income can create financial pressure almost overnight.

Mortgage repayments, rent, food, utilities, and childcare costs continue regardless of whether someone is able to work. “While the majority of people insure their property, far fewer Kiwis insure the income that sustains it,” says Redfern.

“Underinsurance in New Zealand is very real, and it tends to widen during periods of financial strain. For example over 90 per cent of Kiwis have home and car insurance, while only 41 per cent of Kiwis have life insurance, and as low as 20 per cent have income protection insurance.*”

That is why income protection and health insurance are increasingly being viewed as core financial tools.

The COVID-19 pandemic was a turning point for many New Zealanders. It highlighted how quickly circumstances can change and forced people to reconsider the importance of financial resilience. Since then, awareness around health, wellbeing, and personal risk has grown significantly.

Mental health

Mental health has also become a major focus within the sector. Conditions such as anxiety, depression, and burnout are now more openly discussed. Insurers have responded by expanding support services.

This shift reflects broader societal changes. Insurance is increasingly being linked to preventative health and wellbeing, rather than simply reacting after something goes wrong. Some providers are now incorporating wellness programmes, preventative healthcare initiatives, and digital health support into their offerings such as the Connected Care support from Asteron.

Complementary with an Asteron Life policy, Connected Care provides customers access to global medical professionals, a speciality mental health advice, support with nutrition and fitness, as well as Heart Coach offering a specialise care plan, cardiac support app, and expert guidance.

The rise of preventative health reflects another important trend: people are taking greater responsibility for managing their own risk.

Financial advisers

For financial advisers, the challenge is helping clients understand that insurance is not simply another cost – it is a form of protection that underpins broader wealth strategies. Building wealth is not only about growing assets. It is also about protecting what has already been built.

A well-structured investment portfolio can take years to establish, but an unexpected accident, or major financial shock can significantly undermine long-term goals if adequate protection is not in place.

This is particularly relevant for self-employed people and small business owners, many of whom may not have access to employer-funded sick leave or workplace insurance support. If they are unable to work, income can stop immediately while expenses continue.

In this environment, insurance becomes part of a wider financial resilience strategy. It provides breathing room during difficult periods and can help prevent short-term disruptions from turning into long-term financial setbacks.

Conversation around insurance

Importantly, the conversation around insurance is also becoming more personalised. Consumers want policies that reflect their individual needs, lifestyles, and financial situations rather than one-size-fits-all products.

That includes flexible cover options, clearer communication, and greater transparency around exclusions and claims processes.

Trust remains central to the industry. Insurance works effectively when customers understand what they are covered for and have confidence that support will be available when needed.

As New Zealand continues to navigate economic uncertainty, healthcare pressures, and climate-related challenges, the importance of insurance is likely to grow further.

For investors and households alike, the key issue is no longer whether risk exists – it is how prepared people are to manage it.

Insurance cannot prevent unexpected events from happening. But it can help reduce the financial impact when they do.

In an increasingly unpredictable world, that protection may prove to be one of the most valuable investments of all.

*Financial Services Council Money & You: Taking Cover and Managing Risk 2026 reports