"The number of claims coming through is very high, something has to be done.

"We're seeing big payouts on minor conditions. People are back to work in three months and ending up with $1 million. It’s a windfall rather than covering a need."

He said that was driving up the cost of premiums and prompting more interest in simple trauma products that would pay out in a more limited number of circumstances. “Companies are looking at trying to strip out benefits so claims aren’t as high and premiums become more affordable.”

But he said it became hard for advisers who had to weigh up the best policy to recommend to a client. If they were recommending a product less likely to pay out, they had to make that clear.

Fidelity Life has launched a new product that will offer cover for up to five different, unrelated events, each paying up to 20% of the total sum insured.

Trauma Multi – Standalone is available separate to life cover.

“Traditionally trauma insurance sees a lump sum paid in the event of a health trauma occurring.  New trauma cover could be taken out after a claim, but that would require a new health review which would often be influenced by the illness suffered; therefore affecting future insurability,” Jennings said.

“But this way Kiwis have the confidence that they can receive separate payouts, in the event that they suffer multiple unrelated health traumas.  These payments are not severity-based like other products in the market which can make it difficult for the customer to know what they will and won’t be paid out for, without going through a full assessment of both the condition and the severity of it.”