Health insurers criticised for using ‘loophole’ to raise prices 

Australian private health insurers have been criticised for using a loophole to raise the prices of Gold Cover policies.  

This week the Commonwealth Ombudsman found evidence some insurers have been raising prices through ‘product phoenixing’ – closing existing policies to new customers, and creating almost identical policies at a higher price. As a result, new customers of Gold policies may be paying hundreds more than existing customers. 

An Actuaries Institute report found Gold policies in Victoria for one adult available between July 2020 to July 2024 had decreased by a third, with those available costing, on average, $38 more in premiums a month, and $184 more in excess fees. 

By law, insurers can only raise premiums once a year by a percentage approved by the Minister of Health and Aged Care, Mark Butler. 

Mr Butler told the ABC that while product phoenixing was not illegal, “It is clearly against the spirit of the law. It’s an underhanded, largely secret way of health insurers raising their prices outside of the usual approval process,” he said, adding he would consider legislation to stop the practice.  

But Private Healthcare Australia, peak body for the health insurance industry, said insurers were grappling with health inflation costs and higher claims. In a statement, the organisation said policies were usually closed because they were making a loss.  

“When more expensive policies are created, the pricing reflects the underlying cost of healthcare, which is increasing every year in an inflationary environment,” said Private Healthcare Australia, adding it would work with the federal government to address the issue.  

Read the ABC story. 

Trudie McConnochie

Writer and Researcher

Knowledge is power – that’s the guiding principle behind everything Trudie writes, and it’s a philosophy she brings to her work at healthslips.com.au. By breaking down complex information into easy-to-understand blogs and stories, she aims to empower Australians to make the best choices and an informed decision around private health insurance.

Trudie understands firsthand some of the complexity of private health insurance having moved to Australia from New Zealand and having to navigate a vastly different public healthcare system and health insurance structure.

Trudie holds a Bachelor of Communication Studies (journalism major) from the Auckland University of Technology.

Read more.