In 2017, it was published by the Australian Prudential Regulation Authority (APRA), that nearly 55% (13.5 million) of the country’s total population had private health insurance, putting it ahead of the UK and even neighbouring New Zealand by a significant margin.
However, that percentage pales in comparison to the private health insurance sector in countries like France or Belgium, where 80% or more of the population are covered by private health insurance plans.
Is Something Holding the Industry Back in Australia?
Unfortunately, there are a number of factors that are indeed holding the Australian insurance market back and, unless they are addressed, the growth will be slow for the foreseeable future. As to what those factors are, the following should provide a decent idea.
The premiums for private health insurance policies across the nation have increased by 4% – 6% every year in the last decade, and that is not good news for the industry, or the customers.
According to the The National Health Survey: Users’ Guide 2017-2018, Australians who have private health insurance already do not seem to mind the increase as much, and actually consider the premiums they pay for their policies to be quite just. Therefore, the existing customers are not very likely to drop their current policies, but the problem lies elsewhere.
It was seen that rather than losing old customers, the main issue is that the health insurance industry in Australia as a whole is having trouble with attracting new ones. A large majority of Australians who do not already have insurance are finding the average premium rates to be too costly and unaffordable.
In realisation of this roadblock in the path of steady, yearly growth, system in the private health insurance sector has started taking measures to make insurance more affordable. Among other more recent policy designs, the couples’ health insurance policies in particular, have seen a lot of success. It’s cheaper than getting separate insurance for each partner.
Out of Pocket Expenses are a Turnoff
This is a problem that currently prevails in the insurance industry worldwide, but given the high cost of premiums in the country, Australians in particular, are not fond of out of pocket expenses.
In other words, each time a customer learns on the spot that their insurance policy doesn’t cover their whole treatment, because the agent probably did not mention it at the time of selling the policy, the private health insurance sector as a whole, earns a bad reputation.
Too Complex for Comfort
In a time when everything is being simplified, the insurance sector in Australia is still a complex jumble for the uninitiated customer. The clauses keep changing and it quite literally, scares away the new customers!
Simplification, full coverage and better value-for-money policies are the three solutions to the three primary problems which are halting growth of the Australian private health insurance industry. Steps are already being taken and hopefully, the sector’s growth will gain pace again soon as a result of those steps.