Proposed ban on insurers phoenixing policies welcomed
This week we welcomed moves to ban private health insurers from engaging in “phoenixing”.
Our submission on the proposed changes supports moves to outlaw phoenixing, which involves insurers exploiting a loophole that allows them to close existing policies and open an almost identical policy at a higher premium — bypassing the regulated premium round process.
The proposed changes will force insurers to use only the annual premium round to seek approval for the pricing of new products, unless there are exceptional circumstances.
Our submission argues “exceptional circumstances” must be clearly defined in legislation to prevent any possibility of insurers finding loopholes to implement product phoenixing. The term “public interest” — already used in the legislation to guide ministerial decisions on premium increases — should also be clearly defined.
In a media statement AMA President Dr Danielle McMullen said private health insurers had enjoyed extraordinary profits for many years with few consequences for poor behaviour.
“The widespread practice of phoenixing is a major factor in consumers struggling to access the level of cover that meets their needs, and it is eroding public confidence in the private health system,” Dr McMullen said.
Our submission also calls for serious penalties to apply for insurers that continue product phoenixing once legislative changes are implemented.
