Private Health Insurance Premiums Set for Steepest Rise in Eight Years
Private health insurance premiums are poised to climb by an average of 4.41 per cent this year, marking the highest increase in eight years. This surge adds fresh pressure to household budgets already strained by higher mortgage repayments and energy bills. While some funds are implementing fee hikes well below the average, others are raising premiums by nearly 6 per cent.
Varied Increases Across Insurers
Official government data indicates that insurer GMHBA will see one of the lowest premium increases for 2026 at 1.98 per cent, followed by HBF at 2.15 per cent. Conversely, Australian Unity customers will face the steepest hikes at 5.98 per cent, with NIB set to lift premiums by 5.47 per cent.
Drivers Behind the Premium Hike
Kate Browne, Head of Research and Insights at Compare Club, described the 4.41 per cent figure as an average that can mask substantial differences between funds and individual policies. She characterised the current environment as a "triple whammy" for households.
"We’ve had a rate rise, we’ve had energy rebates end, which were really helping cut inflation, and now we’ve seen this hike, which is the highest we’ve seen in eight years," she said.
Browne noted the drivers are multifactorial, including inflation increasing healthcare costs, rising private hospital expenses, and an ageing population leading to more complex and expensive claims.
"We’re an ageing population ... As we get older, our needs become more complex and often we need insurance for things like joint replacements and some of those really expensive procedures," she explained.
Why Australians Aren't Switching Funds
Despite rising premiums, Compare Club’s analysis of 17,000 recent customer calls revealed a striking gap between frustration over costs and actual switching behaviour. "We’ve surveyed consumers, and many of them say they don’t feel they get particularly great value," Browne said.
However, 48.7 per cent of people surveyed said they had never switched funds or looked for a better deal. Even more concerning, 44 per cent of respondents incorrectly believed they would need to re-serve waiting periods if they switched insurers, a rule that changed in 2007.
"That could be affecting about 6.7 million people," Browne emphasised, clarifying that waiting periods only apply when upgrading cover, not when switching insurers for similar coverage.
Fear and confusion were identified as major barriers:
- 15 per cent said health insurance was too confusing to compare.
- Almost 5 per cent said they did not know how to switch.
- 20 per cent believed it would not be worth it because savings would be too minimal.
Significant Savings Possible Through Switching
Data shows that savings can be substantial. "On average, we see people save $300 by switching," Browne said. She cited one family who had been with the same insurer for 24 years, paying over $10,000 annually for top cover.
"They were paying for pregnancy cover, IVF, weight loss surgery ... they didn’t need any of that, and they were able to shave five and a half thousand off their annual bill and still have pretty good cover," she noted.
Browne also warned about older "zombie policies" that may no longer offer strong value. "If you’re on a really old policy with your health insurer, there is a good chance they’re not going to contact you and say, ‘Hey, you should switch’, yet new customers will be on a far better deal," she said.
She added that extras benefits on older policies may not have kept pace with inflation, meaning consumers receive less back in real terms than when they first signed up. "What may have been a good deal 12 years ago has not kept up with the prices you’re being charged now," she cautioned.
What a Typical Policy Costs
To illustrate real-world costs, quotes were sourced for a typical NSW family of four: a 35-year-old couple with two dependent children earning a combined $202,000 before tax, seeking combined hospital and extras cover. The policy included private hospital treatment, ambulance, general dental, optical, physiotherapy, and psychology, with a $750 excess.
Focusing on Bronze and Bronze Plus hospital products paired with mid-level extras, monthly premiums ranged from just over $210 to nearly $290—a difference of up to $950 annually. For this family, the cheapest policy equates to about 1.7 per cent of their monthly take-home pay.
However, price alone does not determine value. Policies differ in hospital category inclusions, annual extras limits, waiting periods, and gap arrangements, all of which can significantly affect out-of-pocket costs.
Expert Advice for Households
With premiums rising again, Browne recommended households use the increase as a trigger to reassess their policy. "From what I see behaviourally, financially, economically, people should use this premium increase as a trigger to really give their health insurance a good check," she said.
"We say every three years you should look around and switch. If it’s been longer than that, there’s a good chance you might be paying too much."
For families feeling squeezed, Browne advised against cancelling policies if possible. Instead, she suggested calling providers to investigate if they are on the right policy for their current stage of life.
Disclaimer: All information in this article is general in nature and does not take into account personal circumstances. Always seek independent, professional financial advice from a licensed expert before making any financial decisions. Past performance is not indicative of future results.
