Recently the biggest player in the market, Southern Cross, gained Commerce Commission approval to take out its closest rival Aetna Health.

AXA Health combined with Tower Health, which were ranked third and fourth by size in the market, are now the second biggest player with premium income of $80 million annually and 170,000 clients.

However, their market share is dwarfed by the 80% held by Southern Cross.

This may change soon as there is speculation in the market that Tower will bid for the Aetna policies the Commerce Commission is forcing Southern Cross to sell.

AXA New Zealand chief executive Ross McEwan says the company chose to sell its health business so it could focus on its core business of investments and life insurance.

He says AXA has a third party sourcing arrangement with Tower which will allow it to sell health insurance products.

As part of that deal initial and renewal commissions will be paid at the existing rates for "at least" 12 months.

"Any future review of commission rates will ensure that commission is market competitive," he says.

Tower group managing director James Boonzaier says the deal does three things for the company.

It doubles market share, adds a range of comprehensive health insurance products to complement Tower's major medical range and it boosts Tower's presence in the group and corporate market (it was only active in the individual market).