Australia’s private health insurers have been put on notice by the Commonwealth ombudsman due to their increasingly dubious practices, specifically the controversial maneuver known as “phoenixing.” This tactic involves terminating existing insurance products only to introduce new, nearly identical offerings at significantly higher prices shortly thereafter. Health Minister Mark Butler has condemned these actions, calling them a form of price gouging that undermines consumer trust.
In one instance, a premium saw a staggering 21% price hike within a year post-phoenixing, raising concerns about fairness in pricing among similar policyholders. The practice, while not illegal, is seen as violating the spirit of existing regulations. Following investigations prompted by consumer advocacy group Choice, which highlighted increases of up to 47% over three years, the ombudsman revealed that some insurers are exploiting loopholes to bypass regulatory approval for price hikes.
Butler has threatened to enact legal changes to prohibit phoenixing and has vowed to “name and shame” those insurers that fail to rectify their practices. He has recently rejected proposed price hikes from all 29 private insurers and instructed them to submit more reasonable increases, underlining his commitment to protecting consumers and restoring accountability within the sector.