While the amount of lives covered has fallen by 30,000 from the December 2008 peak, the corresponding slowdown in claims has been welcomed by HFANZ.

Chief executive Roger Styles said claims costs in the year to June 2011 grew by just 3.8% on the previous year, well down on the average 9% per annum cost growth seen over the last five years.

"While it is a positive trend, it is not consistent across all claims areas. For example, anecdotal evidence suggests that there has been a significant reduction in cardiac claims but an increase on orthopedic surgery," he said.

"The lower rate of claims cost growth will be welcome news for policyholders, as premiums have been rising in response to past jumps in claims costs."

Claims paid in the June 2011 quarter totalled $212 million, taking claims paid in the 12 months to June 30, 2011 to $827 million.

Styles said this was an increase of $30 million, or 3.8%, on the total claims paid in the 12 months to June 2010, and continued a downward trend in claims inflation since cost growth peaked at 13.2% in the December 2008 quarter.

He also cited the reduction in the number of people with health cover for the slowing of claims cost growth.

Since December 2008, the number of lives covered by health insurance had fallen by around 30,000, or 2%.

Despite this, he said 31% of New Zealanders - 1.367 million people - had health insurance, a fairly high ratio for a country with no specific incentives or elements of compulsion.

"This shows that people are still valuing the certainty and peace of mind health insurance provides," he said.

The report also found the trend away from comprehensive health cover to more elective surgical and specialist cover continuing.

The 22,000 decrease in lives covered represented a fall of 5,800 with elective and specialist cover, and a reduction of 16,400 with comprehensive insurance policies.

Of the total 1.367 million lives covered, 67.1% have elective and specialist cover, with just 32.9% opting for comprehensive health insurance.

Total health insurance premiums hit the $1 billion mark for the June year, as premiums rose to offset claims cost growth.

Styles said the premium income for the 12 months to June 30 totalled $1.002 million, an increase of $85 million, or 9.3%, on the $918 million in premium income for the June 2010 year.

He said that despite claims cost growth showing more volatility than premium growth, the average annual rate of growth for both claims costs and earned premium over the last decade was 7%.

"This marks the significant contribution that private health insurance makes to health care in New Zealand."