After last year’s hike of premiums and an increase in return from investments, Aussie private health insurers’ profits have risen by more than 18%. But, does this mean we’ve been duped?
This rise in profits comes after the government allowed an average rise in premiums of 6% to come into force last year. Then, this year, another 5% increase was allowed, and came into effect last month. Despite a net gain of 26, 000 insured people over the last quarter, insurers are finding that many customers are already cutting back on cover or finding deals that suit them better with hospitals and medical suppliers.
So why has the government allowed increases in fees? And why are these insurers gaining so much profit? The simple answer is; it’s not that simple. All of these profits and rises in fees are actually in response to a drastic increase in payouts. Australians are claiming more and more from these insurance companies, to a higher value than the raised prices in fact. Things like the chiropractor and physio and being claimed a lot more, and these rises in fees and profits are attempts to offset the rising costs for insurers to pay out for customers. To put it in perspective, even with the 5% increase in fees this year, benefits paid out grew by 5.4%.