Private health insurance premiums are set to increase by 6% to 7% this year, or up to A$195 (US$176) for a family, reports the Herald Sun newspaper. The estimated 6% to 7% premium rise will increase comprehensive family coverage cost without extras, from A$2,772 to A$2,966 a year, and by A$96 a year for singles.
The premium hike, to be announced by Health Minister Nicola Roxon, follows a government review of increases proposed by insurers. Last year, premiums increased by 6.02% on average.
Commenting on the impending hike, Michael Armitage, Chief Executive of the Australian Health Insurance Association says that in comparison with rising costs, premium increases are always kept to a minimum, with a history of premium increases going up 3 to 4% less than the benefit outlays.
General patient treatment benefits rose 8.7% last year, according to the Private Health Insurance Administration Council, with a 9% increase for medical specialists.
Meanwhile, the government is set to reintroduce for debate in the Senate a proposed means test for Australians to enjoy a 30% private health insurance rebate. Australian Treasurer, Mr Wayne Swan, calls the health insurance legislation "critical to ensuring the long-term sustainability" of the nation's budget and health system. The reform would end subsidies to the most well-off Australians and generate savings of about A$9 billion over the next decade.
The Australian marketplace needs more annuity products to help retirees manage investment, longevity and inflation risk, the Money Management website reports citing partner and actuary at PricewaterhouseCoopers, Ms Catherine Nance.
Ms Nance, speaking at a session of the recent Self-Managed Super Fund Professionals' Association of Australia conference, said that retirees needed more flexible annuity products if they are to continue working into old age.
Most pensions are account-based, in which all the risk reside with pensioners, which makes it very difficult to manage their retirement, she notes.
At present, 80% of current retirees are on all or part of a managed pension, with typical retirement savings of A$70,000 (US$63,150), while 20% of males and 10% of females have more than A$100,000 in retirement, she says.
Almost a third of Australian women and a quarter of men are classed as financially unfit, despite improvements in the economy, according to the findings of the second annual Bankwest Financial Fitness Index survey.
Nearly 28% of those surveyed had an over-reliance on debt, little or no regular savings, no insurance coverage and high housing costs relative to income. This is up from 22% last year during the global financial crisis, indicating that the benefits of the economic recovery have yet to be felt by many Australians.
Bankwest spokesperson Adrian Bradley said: "While there has been a recovery, the market and super funds, a major form of wealth for many Australians, are still well down from the pre-GFC (global financial crisis) highs of November 2007."
A majority of Australians, 69%, said 2009 had been a difficult year for them financially. About half of those surveyed reported borderline financial fitness, which included moderate savings, some insurance, average housing costs and moderate debt levels. Just 22% were classed as financially fit, with regular savings, a range of insurance, low housing costs and high asset levels relative to debt and income.
Just over one-third of Generation Y continued to struggle with their finances over the year, with 34% declared financially unfit, according to the index. Retirees aged over 64 were financially the fittest generation, with 35% being financially fit and only 15% classified as financially unfit.
The online survey of 833 Australians across all states, territories and age groups also found that resource-rich Western Australia is home to the greatest proportion of those financially fit citizens, with 36% of residents belonging to the category. Meanwhile, Queenslanders are the least financially fit, with 18% fitting into the category.
The travel insurance industry has been called on to clean up its act following complaints of high commissions and misleading wording, reports the Sydney Morning Herald. The General Insurance Ombudsman has said that travel insurance companies are overrepresented in complaints and need to lift their game. Travel insurance accounted for 15.4% of all disputes in the general insurance division in the past financial year.
General Insurance Ombudsman John Price says that disputes commonly arose over the wording of the policy. "Some policy wording can be very misleading," he said, adding: "People need to understand what they are getting. People are led to believe they are receiving something when they read this hype saying you will be covered for all these problems overseas when in fact you won't be."
He says that while the industry has worked on providing clearer policies but more could be done. "The insurance industry has worked towards that, to provide clearer policies, to keep the wording simple and using fonts which can be read without the aid of a magnifying glass."
Complaints have included refusals to pay claims involving common health ailments, unattended luggage and the voiding of cover to countries that have Department of Foreign Affairs and Trade warnings - which includes popular tourist destinations such as Bali and parts of Thailand.
Leading consumer group Choice has also warned travelers to be wary when buying travel insurance. "Commissions charged by travel agents can be quite weighty, up to 50% in some cases," a Choice spokesman said. However, Australian Federation of Travel Agents Chief Executive Jayson Westbury rejects claims that costs are too high. "It's reasonable for a travel agent to make a margin on selling a product," he said.
IAG joins in campaign against fire levy on policies
Insurance Australia Group, the country's biggest motor and home insurer in the domestic market, says that it has been forced to add A$235 million (US$212 million) to the cost of its policies because of the "inequitable" fire service levy imposed by some state governments on insurance policies, reports The Australian newspaper.
The general insurer's Chief Executive, Mr Michael Wilkins, is calling for a fairer system under which instead of "slugging" only people who take out home and contents, and business, insurance, all property owners would share the responsibility for funding fire services.
Insurance companies in New South Wales, Victoria and Tasmania have to contribute to the funding of fire brigades at the beginning of each financial year. Mr Wilkins says that after the Victorian bushfires last year, the cost of this funding for insurers has risen significantly, forcing premium rates to rise.
Another insurer, Suncorp, says that the fire service levy accounts for 20% of the cost of its metro home insurance policies in New South Wales and Victoria. For rural properties in Victoria, it can be as high as 31% of the base premium.
The A$24 billion general insurance industry has been campaigning to abolish the controversial tax, claiming it contributes to Australia's high level of under-insurance due to the impact on premiums. The Insurance Council of Australia, which represents general insurers, says that determining how much to add to premiums to account for the contribution is difficult and often leads to under- or over-collection by insurance companies. The amount insurers contribute to fire services is based on their market share of the total "deemed" premium pool for the year ahead.
