New Zealanders over 50 are paying a loyalty tax as insurance premiums rise three times faster than for younger policyholders
New Zealanders aged over 50 are bearing the brunt of insurance cost increases, with new data showing their premiums have risen up to 35 percent over three years while younger policyholders have seen little change — and some have even paid less than before.
Analysis from insurance comparison platform Quashed, which drew on data from roughly 3,000 people in each age bracket, found that general insurance costs for those aged 51 to 60 averaged $5,111 in the most recent survey — a three-year increase of 28 percent from $3,854. For New Zealanders aged 61 and over, the average reached $5,106, up 35 percent from $3,740 three years ago.
Younger policyholders have fared considerably better. Kiwis aged 25 to 30 saw their average general insurance cost fall 1 percent year on year to $4,722. Those aged 31 to 39 experienced just a 0.4 percent increase to $4,795, while the 40 to 50 age group saw a 0.2 percent rise to $5,019. The overall market held flat year on year, with the national average sitting at $5,020.
The divergence points to a structural disadvantage built on customer behaviour rather than claims risk alone. Quashed chief executive Justin Lim describes the phenomenon as a “loyalty tax” — a premium on staying with the same insurer. “We do see fewer people in that age group shopping and switching,” Lim told interest.co.nz. “They are typically with insurers for a much longer time,” he said, and they “are paying a loyalty tax for sticking with their provider.”
The implication is that insurers have been quietly repricing their most loyal customers upward, knowing those customers are less likely to respond by shopping around. This is a pattern seen in other financial services markets and it tends to compound over time — the longer a customer stays without reviewing their cover, the more they may be overpaying relative to what a new customer in the same risk category would pay.
General insurance in New Zealand covers home and contents, vehicles, and other asset protection — costs that have a direct bearing on household budgets. For many older New Zealanders, fixed or semi-fixed incomes mean that a 35 percent cost increase over three years represents a meaningful squeeze. The $1,366 difference in average annual premiums for the over-61 age group versus where they stood three years ago is not trivial, and it comes on top of broader inflation that has lifted household costs across the board.
The broader insurance market is currently moving through what Quashed describes as a “soft cycle,” with increased competition among providers putting downward pressure on new business pricing. That competition is not flowing through evenly to all policyholders, however. The soft cycle appears to be delivering savings for switchers and new customers — often younger people more accustomed to comparing services online — while long-standing customers on legacy pricing are being left behind.
This is not a new tension in insurance markets. Regulators in the United Kingdom and Australia have moved in recent years to address so-called price walking — the practice of increasing renewal premiums year on year for existing customers at rates that outpace any equivalent increase in risk. The Financial Conduct Authority in the UK introduced rules in 2022 requiring insurers to offer renewing customers prices no higher than equivalent new customers. No such regulation exists in New Zealand, though the Commerce Commission has previously examined loyalty pricing and pricing transparency in other sectors.
For New Zealanders over 50 who have not reviewed their insurance recently, the Quashed data suggests that shopping around is likely to produce meaningful savings. The gap between what loyal customers are paying and what active switchers pay has widened considerably in recent years, and the soft market conditions mean there is genuine competition for new business. Many insurers will also offer discounts for bundling multiple policies — home, contents, and vehicle — which can partially offset the premium differences between age groups.
Excess levels are also worth reviewing. The Quashed data notes that many policyholders have shifted toward higher excess levels of $750 to $1,000, which can reduce premium costs but increases the out-of-pocket cost when a claim is made. This trade-off is worth considering carefully, particularly for older policyholders on tighter budgets for whom an unexpected $1,000 excess could present a genuine hardship.
The figures come at a time when cost-of-living pressures remain front of mind for New Zealand households. While headline inflation has moderated from its 2022 peak, the cumulative effect of several years of above-average price increases has left many households with substantially higher fixed costs than they carried before the inflation cycle. Insurance sits alongside rates, electricity, and food as a category where sustained increases have added up to real financial pressure.
The Quashed data suggests that for over-50s in particular, the most straightforward path to relief may be the simplest one — getting a comparison quote and being willing to switch. The market is competitive and the potential savings, given the gap between loyal-customer pricing and new-customer pricing, appear to be meaningful.
Do you review your insurance cover regularly, or have you found that loyalty has cost you money? Share your experience in the comments below.