Millions of health insurance policyholders could switch or ditch their cover this year, in light of the 3.95% average premium increase announced last week, a comparison website has suggested.
A massive 48% of those with private health insurance, equivalent to 6.5 million members, will review and make changes to their cover if their premium increases by 4% in April, according to a finder.com.au survey of 2,274 Australians.
The study found that 27% of policyholders plan to switch insurers to get a better deal; 9% will remove their extras cover and maintain a private hospital-only policy to save a few dollars; while a further 12% will consider dropping their cover altogether.
A market analysis by finder.com.au revealed that with the 3.95% premium increase, the average annual health insurance premium in Australia will increase by roughly $134 – from around $3,388 to $3,523.
Sophie Walsh, insurance specialist at finder.com.au, warns that another premium increase this year may mean the cost will outweigh the benefits for thousands of policyholders.
"While 3.95% is the lowest increase since 2001, this is still well above inflation and wage growth last year – 1.8% and 1.9% respectively, so for many Australians it could be the straw that breaks the camel's back," Walsh said.
Walsh urged customers to shop around for the best insurance cover, especially those whose premiums are increasing by more than the average 3.95%.
“With insurers increasing their annual premiums by more than double the rate of wage growth, it’s more crucial than ever to shop around and make sure you’re getting the best deal to avoid paying for cover you don’t need,” she said.
Not-for-profit insurer HCF, for example, had the lowest average increase last year out of the big four funds, raising its premiums by just 3.65%, finder.com.au said in a statement.
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