In the June quarter health insurers recorded that an additional 1900 lives were covered, bringing the total number of New Zealanders with health insurance to 1.39 million.

"Most of that growth took place in the last half of 2007 rather than the first half of 2008," HFANZ chief executive Roger Styles says. "There are a lot of people feeling the pinch and this will be affecting both the numbers of new policies taken out and retention rates for existing policyholders.

"It is likely the industry is moving into a relatively flat period, with low or no growth in the number of lives covered."

He said the last few years had seen sustained growth in the number of lives covered, as economic conditions were good, the population was increasing and people were facing increasing difficulties in accessing elective surgery in public hospitals.

Most new policies were specifically for elective surgery rather than comprehensive coverage, while the trend for growth continued in the June year in the number of those aged under five, 20-29 and 60-64 getting health insurance.

Claims paid in the last year jumped 11.6% to $657 million.

Styles said the tightening up of access to elective surgery in the public sector was a big factor, along with an increase in the costs of treatment and the advanced technology being used in private hospitals.