Around 15 million Australians with private health insurance will face higher premiums from April 1, after the federal government approved an average increase of 4.41% - the steepest rise in almost a decade.
The decision follows months of assessment by the Australian Prudential Regulation Authority (APRA). Health Minister Mark Butler said medical and hospital costs, which rose by 5% over the last financial year, were a key driver of the adjustment and that insurers were asked to revise their submissions several times before approval was granted.
The impact will vary depending on the insurer. Medibank will raise premiums by about 5.1%, while Nib is implementing increases of around 5.47% across many products. Bupa’s approved rise is 4.8%.
In contrast, Members Health Fund Alliance - which represents not-for-profit and member-owned insurers - said the average change across its funds will be 3.62%, below both the industry average and the current CPI rate. The alliance said its member funds operate on a net margin of 2.6%, compared with around 7% for the three largest for-profit insurers, whose average increase is 5.12%.
Markets responded swiftly to the confirmed increases. Shares in Medibank rose about 6% and Nib gained around 5% following the announcement, contributing to broader gains on the ASX 200 alongside stronger performances in banking, technology and financial stocks.
Michael Mazboudi, chief operating officer at RCC National, said broader cost pressures across the insurance system were contributing to higher premiums.
“The latest premium increase reflects cumulative cost pressure in the system. In my sector – general insurance - we are already seeing these cost pressures reflected in premiums. Rebuild costs remain materially higher than pre-COVID levels, skilled labour is constrained, and severe weather events are occurring more frequently. Insurers are responding to real underlying claims cost movements,” Mazboudi said.
“In Australia, weather events are a reality of the landscape, and some drivers are outside any one party’s control. That makes it even more important to control what we can. The priority for the industry must be efficiency and resilience: faster claims resolution, stronger trade management, and better risk mitigation to reduce leakage and improve rebuild outcomes. Over time, premium affordability is directly linked to how effectively the industry manages claims performance and stabilises the true cost of reinstatement.”
