Increasing demand for affordable private health insurance has spurred record growth for intermediaries in Australia, with nearly 60,000 new entrants entering the market in the 2023-24 financial year (FY 2023-24), according to the latest report by the Private Health Insurance Intermediaries Association (PHIIA).
The PHIIA’s latest State of the Sector Survey showed that leads rose by 19% to 2.4 million, marking the highest level since the survey began in 2017.
The association’s members – which include comparison services like Compare Club, Compare the Market, iSelect, and ItsMy Group – saw a 16% year-on-year increase in policy sales, with 216,689 policies sold. This marked a recovery after two years of declining sales, driven largely by older Australians seeking more extensive coverage.
Data from the Australian Prudential Regulation Authority (APRA) showed that 919,616 new private health insurance policies were sold in FY 2023-24, with PHIIA members accounting for 24% of the total.
New entrants made up 28% of these sales, slightly down from 31% the previous year, as switching activity increased, reflecting a growing trend of consumers seeking better deals or enhanced coverage.
In the same period, gross annual premiums for combined policies rose by 3%, in line with industry-wide trends.
The report highlighted a shift in insurance preferences. Younger consumers largely continued to favour low-cost, entry-level options. Meanwhile, older policyholders, especially those switching providers, showed increased interest in more comprehensive plans such as Silver and Silver Plus.
Silver policies saw notable growth, increasing from 41% to 48% of overall policy sales in the 2023-24 financial year.
PHIIA CEO Christopher Zinn noted that consumers are now moving toward higher-tier policies, despite a 3% increase in prices – still below inflation. This is quite a change from the previous financial year, when many consumers opted for more affordable, lower-tier products, leading to a drop in premium-level coverage sales.
Bronze Plus policies also grew in popularity, accounting for 30% of sales after an 18% overall increase.
Meanwhile, sales of Gold-tier policies continued to fall, representing just 3.5% of total policies sold, a 10% decline. However, a significant portion of Gold policies were bought by younger Australians, with 50% of sales going to those under 35. This trend is attributed to access to psychiatric services, which are only available under Gold-tier coverage.
PHIIA chair Gerald Brown said this is a critical issue for the industry as younger consumers are increasingly drawn to Gold policies for psychiatric care access.
The broader health insurance market also saw significant activity, with insurers paying out over $18 billion in benefits for hospital stays and an additional $6.3 billion for extras like dental, physiotherapy, and optometry services in the year leading up to June 2024, according to APRA data.
Private health insurance membership also increased during this period, with an additional 64,000 Australians securing hospital treatment cover in the June 2024 quarter.
Ancillary coverage grew by over 120,000 members, with the largest growth seen among those aged 30 to 34, suggesting that younger Australians are recognizing the value of private health insurance.
