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The next 5 to 10 years are set to bring significant reform to the wider health sector and will have major implications on private health insurance (PHI), requiring funds to be prudentially sound, with strong risk management practices at their core.

We have deep experience operating in highly regulated industries with complex reporting requirements. That’s why we audit more PHIs than any other audit firm. It’s this depth of experience that allows us to understand the specific and unique pressures PHIs face.

For instance, under the broader insurance umbrella, private health insurance is the only type of insurance subsidised by the Government to take pressure off the public health system.

The latest Intergenerational Report from the Australian Government breaks out health funding across Federal (contributing 41%), State and local governments (27%, and private contributions (32%). PHIs are doing a lot of the heavy lifting, however it is well documented that health spending is generally growing faster than the rest of the economy due to demographic shifts, advances in technology and rising incomes. There is a distinct trend in both individuals abandoning their private health insurance as “too expensive”, and more expensive claims from Australians needing support.

The private health insurer of the future will be an organisation whose focus is centred on the member and their experiences, an enterprise that is engaged in data analysis and leveraging emerging technologies to better understand the membership base and keeping up with trends in health care; a fund that is open to partnering with likeminded organisations and flexible in the nature of these relationships and service offerings.

Top trends impacting the private health insurance sector

Risk & Regulation

With Private Health Insurers becoming APRA regulated, it is essential they adopt financial institution style risk management and governance style frameworks.

Dynamic pricing

While still promoting the non-discrimination of any person to join a health fund, the increased use of data from multiple sources will assist health insurers in improved pricing of the risk to members.

Government reform

The Australian health care sector has undergone and will continue to undergo, significant reforms. With an increasingly ageing population, the need for facilities and cost management will require a systemic change in the value chain of health care services.

Primary care providers

As a consequence to wider health reform, there will be an increased partnership and likely self-management of primary healthcare services by health insurers, and an emphasis on same-day surgery and other low complexity procedures assisting funds to manage costs.

The evolution of big data

There is a raft of data already available to PHI's that is mostly siloed across the organisation, with the inclusion of the Internet of Things (IoT) devices and access to broader health records from service providers. PHIs will be in a position to offer a more focussed and tailored customer experience putting members first.

Collaboration and consolidation

Combining the pressures of cost management, competition and regulation, it is very likely that the PHI market will see a degree of consolidation as organisations look to attain scale to remain competitive. Conversely, there would also be opportunity amongst the members-owned cohort to continue collective marketing and potentially joint arrangements for facilities whether in dental, eye care or primary care services.