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Is it time to switch your insurance?

17 August 2016 - 11:31am

Private health insurance is as much an emotional product as it is a medical or financial one. It could be the difference between a permanent injury and a temporary one, the policy that separates an easy fix from a long slog to recovery, and may very well be one of the most important pieces of paper you ever sign.

It's no wonder, then, that people can feel quite strongly about the performance of their private health insurance. It's a huge industry with a massive range of choice in coverage, and that means plenty of competition among funds to service your needs. A person who is unhappy with their insurance may very well switch out for something more suitable after a quick comparison - should you be one of them?

Is your health insurance cutting the mustard?Is your health insurance cutting the mustard?

The squeaky wheel gets the grease

Insurers aren't doing this just to try and squeeze some more capital out of their policyholders.

When it comes to private health insurance, and likely a whole host of other industries, the factor most likely to cause a grumble among consumers comes down to that most basic of factors: cost.

Every year, health insurance premiums increase, and have been doing so for some time. In fact, the latest Housing, Income and Labour Dynamics in Australia survey from the Melbourne Institute revealed that health insurance premiums increased by about 20 per cent in the 10 years leading up to 2014. Considering the recent increases in April last year as well as this year, this is now likely to be higher.

Insurers aren't doing this just to try and squeeze some more capital out of their policyholders. The Commonwealth Ombudsman explains that the increases have a number of reasons for existing: hospital and health cost rises, wage increases for medical staff, more advanced (and expensive) equipment, and other factors that can put pressure on insurers and the industry at large.

In fact, any increases need to be approved by the Department of Health and the Private Health Insurance Administration Council. If you are unhappy with the costs of your insurance, it is important to remember that they aren't high because your insurer has a grudge against you and your bank balance.

A brief explanation

However, despite this distinction, the Ombudsman still received more than a hundred complaints about premium increases in the March quarter of this year.

Many of these complaints were the result of people noticing a discrepancy between the average industry increase and their personal increases. If you have found yourself in a similar situation, you have to remember that these increases are only an average: your insurer and factors related to your individual policy could make these jumps larger (or smaller) for you compared to others. 

For example, you may have a policy that has coverage for treatment related to diabetes. We've discussed before how diabetes is a growing problem in Australia, and as a result, more people need to utilise their insurance to cover them for diabetes-related procedures. This puts pressure on the health industry, and increases costs for the insurer. Thus, your diabetes-inclusive cover increases in cost as well.

Those without such cover are less likely to see the same kind of increases, because they aren't contributing to the pressure on the industry. It's all down to your own policy and insurer.

Are the winds of change blowing for your insurance policy?Are the winds of change blowing for your insurance policy?

Time to switch?

We would recommend getting as diverse a range of cover as you can reasonably afford.

However, this fact doesn't mean you are trapped in your current policy. You are more than capable of switching, and if you find that you are unhappy due to costs (the most common complaint), you have a number of options at your disposal.

Firstly, you can speak to your current insurer and see if there is a less expensive but still suitable policy available for your use. This battles against rising costs, but you must be careful to keep a hold of the hospital cover if you want to ensure you retain your lifetime health cover. Losing this could result in you being charged an additional 2 per cent loading on top of your premium every year, if you are over 30.

You may also find that your insurer might be able to offer you smaller monthly costs if you make higher co-payments. You might consider axing any ancillary benefits you don't feel you need, but in general we would recommend getting as diverse a range of cover as you can reasonably afford: It is quality over quantity when it comes to health insurance.

Finally, you may decide that your current insurer simply doesn't offer what you need. That's where HICA can help. Getting the right insurance for your financial situation and medical needs is paramount, and the best way to do that is to ensure you investigate a wide range of different policies and insurers.

If you are unhappy with your current policy, give us a call on 1300 44 22 01 and discover a wide range of products to suit your current financial capability and future medical needs.