Health Premium increases

The increase in underlying premiums for existing health products are as follows:

Each year AIA NZ analyses its claims and the cost of servicing a policy carefully, so we can continue to provide comprehensive and competitive health insurance offerings. Consideration is given to our claims experience, the impact of rising medical costs (including medical inflation), and product sustainability.

This year we have observed significantly increased costs across all claims as opposed to specific medical conditions or treatments. Some key contributors to these increased costs include:

1. Medical Advancements
   these give customers more treatment options, less invasive diagnosis or treatment, and improved patient experience and outcomes. Prices for these medical services rise more quickly than prices in the broader economy due to the development of new medical treatments, drugs, and technologies.
2. An increase in general medical costs.
   Private hospital costs in New Zealand have increased due to supply chain challenges, labour cost increases including sector-wide pay negotiations and workforce shortages.
3. Growing demand for health services due to ageing population and growth in chronic diseases.
   In New Zealand, we have observed increased rates of heart disease, cancer, diabetes, and obesity, brought about by worsening lifestyle factors such as diet and exercise. These worsening public health trends lead to a higher demand for health services, which puts upward pressure on private health claims.

There are options to make premiums more manageable. We recommend customers speak to their advisers to assess which options are best for them. Options include:

• Increase excess levels
• Consider opting out of CPI indexation on their Risk insurance cover
• Request the review of any premium loadings (e.g., smoker loadings* or health loadings)
• Reviewing the customer's insurance cover to ensure that they remain appropriate for their needs (e.g., reflective of any changes in family structure or lifestage)
• Remove optional benefits (e.g. Specialists & Testing Benefit)
• Change payment frequency (e.g. monthly to fortnightly) to spread premium payments

Customers also have the option to add AIA Vitality. With AIA Vitality customers earn points by improving their health in areas such as nutrition, exercise, and mental wellbeing. The more points members earn, the higher their AIA Vitality status and the bigger the rewards.

AIA Vitality members enjoy discounted insurance premiums. The initial discount starts at 10% and increases up to 20% or decreases down to 0% depending on the member's engagement in the programme.

AIA Vitality has a membership fee of $11.50 per month to cover the cost of offering the programme, but well engaged members can enjoy benefits well above this fee.

We know everyone's situation is different, and we're aware of the impact premium increases can have.

To help keep cover affordable, one key option that can be considered is changing the excess a customer pays. Basically, the higher the excess they choose, the lower their premium will be. However, this would also mean that they would need to be able to fund the higher excess amount in the event of a claim.

With our health policies, customers could receive the following discounts* at each excess option: