Retired Outram couple David and Anne Richardson contacted the Otago Daily Times yesterday after receiving a 29% increase - from $114 to $146.90 - on their monthly Tower health insurance account.
"We thought that was absolutely ridiculous," Mr Richardson (73) said yesterday.
"So, I decided to stop it and rang them up to cancel the policy. An hour later, a lady rang back and said 'We have something else to offer you. We can do the same coverage for $115, which is only $1 more'.
"I asked her why they didn't offer us this before and she said they could only offer it when a policy was up for renewal. Well, I think that's just a scam. So, I told her to forget it and cancelled the policy."
Consumers Institute deputy chief executive David Naulls said people should shop around for insurance, like all services.
"You don't have to accept price increases. We advise people to ring two or three of the opposition when policies come round for renewal," he said yesterday.
"If you're faced with a 29% increase in anything you should get back to the company and say 'That's a big increase. Why would I pay that?' We tend not to complain in New Zealand, but if you do haggle, then companies are often happy to cut back a bit."
Tower group managing director Rob Flannagan said from Auckland yesterday insurers would try to find the best outcome, if contacted directly.
"It sounds like the person they spoke to has done the right thing and tried to find them a better option.
"We take the opportunity when people call to review their policies and therefore try and offer them the best policy at the best price for their needs," he said.
"By calling us, this policy-holder gave us the opportunity to review their needs.
"Health insurance is a very expensive product, because medical inflation is going up all the time. But if people cancel a product they lose existing conditions, leaving them exposed.
The concern is if people in the 55-plus range cancel their policy and something happens, they have no cover."
Insurance Council chief executive Chris Ryan this week warned that the Christchurch earthquakes and increased rates from international reinsurance providers, which provide financial support to insurers, meant premium increases by all providers were likely.
