Private health insurance

Risk Management for Private Health Insurers

PHIAC has commenced a second round of consultation in relation to effecting improvements in the risk management practices across the private health insurance industry.

It has issued a Discussion Paper “Risk Management for Private Health Insurers” which contains a draft proposed Risk Management Prudential Standard for comment.

The draft risk management standard seeks to establish minimum requirements for effective risk management through four key elements:

1. Risk Management Policy – insurers’ risk management practices, objectives, roles, and responsibilities should be established and clearly articulated.

2. Board responsibility – insurers’ boards should play a critical role in setting the organisation’s approach to […]

Changes to Solvency and Capital Adequacy Standards made by PHIAC

The Private Health Insurance (Health Benefits Fund Administration) Amendment Rule 2013 (No.1) contains changes to PHIAC’s Solvency and Capital Adequacy Standards for private health insurers.

Changes to the Capital Adequacy Standard will come into effect in two stages – quantitative requirements will change on 31 March 2014 and related capital management policy requirements will have effect on 1 July 2014.

Changes to the Solvency Standard will have effect on 1 July 2014.

The Private Health Insurance (Insurer Obligations) Rules (2009) impose requirements on Appointed Actuaries in relation to the Capital Adequacy Standard from 31 March 2014.

Review of the Solvency and Capital Adequacy Standards of private health insurers

The Private Health Insurance Administration Council (PHIAC) has released for comment a consultation paper in relation to the review of the Solvency and Capital Adequacy Standards applicable to private health insurers.

The consultation paper also includes draft legislation for the proposed Standards.

The proposed Standards would introduce a risk-based capital regime aimed at ensuring that:

  • Capital Adequacy Standard: each health benefits fund conducted by an insurer has sufficient assets to ensure the continuing financial soundness of the fund’s balance sheet, taking into account business plans and the potential of adverse profitability outcomes and catastrophic losses in the asset portfolio; and
  • […]

PHIAC Regulatory Plan 2013-14

The Private Health Insurance Administration Council has published its Annual Regulatory Plan 2013-14

The Plan includes:

  • Amendment to the Private Health Insurance (Council Administration Levy) Rules 2007 from 1 July 2013 to increase the Council Administration Levy primarily to recover costs from PHIAC’s new role as the primary source of advice to the Minister for Health on premium applications.
  • Amendments to the Private Health Insurance (Insurer Obligations) Rules 2009 to introduce a risk management standard for private health insurers (this is expected to occur late in 2013).
  • Review of the Solvency and Capital Adequacy Standards included in the Private […]

State of the Health Funds 2012

The Private Health Insurance Ombudsman (PHIO) has published her annual State of the Health Funds Report, providing information on the comparative performance and service delivery of private health insurance funds in Australia for the period from 1 July 2011 – 30 June 2012.

In 2011-12, the issues that caused higher levels of complaints to PHIO were oral information (advice given to members in retail branches or over the telephone); restrictions and exclusions on hospital policies and pre-existing condition waiting periods. There was a decline in complaints about payment delays, premium increases and fund rule changes.

Regulatory data about the funds […]

Fairer Private Health Insurance Incentives Acts passed

The Fairer Private Health Insurance Incentives Act 2012 and its associated Acts have been given Royal Assent.

The Acts reduce from 1 July 2012 the amount of private health insurance rebate an eligible person with a complying private health insurance policy is entitled to when that person has income for surcharge purposes above the relevant Medicare levy surcharge threshold.

For example, in the 2012-13 financial year, in relation to premiums and amounts in respect of premiums paid on and after 1 July 2012:
• singles and couples/families who are in tier 1 will receive a 20 per cent private health […]

PHIAC draft outsourcing standard

PHIAC has issued a second draft of a proposed outsourcing standard for private health insurers.

The Standard will require insurers to:

  • implement a Board-endorsed policy that sets out its approach to outsourcing;
  • ensure that the Board is able to demonstrate to PHIAC that it has identified and can manage any risk that may materially affect the prudential safety of the insurer, associated with an outsourcing arrangement;
  • ensure that their outsourcing arrangements allow PHIAC to access information from the service provider, and for PHIAC to make site visits to the service provider when necessary;
  • ensure that they have prior written approval from PHIAC to outsource […]

Private Health Insurance Ombudsman Annual Report 2011

The Private Health Insurance Ombudsman’s 2011 Annual Report notes a significant increase in overall complaint numbers

The Ombudsman comments that “the issues in 2010-11 where there was an increase in complaints include level of cover, fund rule changes and general service issues. The increase in complaints about these issues is not across all insurers, but is generally confined to two or three of the larger insurers, who made changes to their products last year that affected large numbers of members.”

The Report makes recommendations and contains case studies relating to communicating changes in hospital cover.

Handling health insurance complaints

The Private Health Insurance Ombudsman’s Quarterly Bulletin 59 contains some interesting statistics about health insurance complaints: volume, type and by insurer compared to market share.

Your complaints handling procedures should set out in writing:

(a) the procedures and policies for:

  • receiving complaints;
  • investigating complaints;
  • responding to complaints within appropriate time limits;
  • recording information about complaints;
  • identifying and recording systemic issues;

(b) the types of remedies available for resolving complaints; and

(c) internal structures and reporting requirements for complaint handling.

You should provide a copy of the procedures to all relevant staff. A simple and easy-to-use guide to the procedures should also be made available to consumers, […]

Private health insurance rebate bills re-introduced

The Fairer Private Health Insurance Incentives Bill 2011 and 2 associated Bills have been introduced into Parliament.

If passed, the private health insurance rebate will be income tested from 1 January 2012.

The ATO has produced a useful summary table here.