Australia’s leading professional organization for doctors is lending its support to an initiative aimed at eliminating a deceptive pricing strategy employed by private health insurers. This tactic, known as “phoenixing,” involves insurers discontinuing policies only to reintroduce them under a different name, accompanied by significant premium hikes.
The federal government is moving to close this loophole, intending to ensure that any changes to policy prices are made solely through the annual, government-regulated process. Exceptions to this would only be permitted under exceptional circumstances.
The Australian Medical Association (AMA) has endorsed this proposal, emphasizing the need for a regulated approach to pricing changes for new insurance products. The practice, while not technically illegal, is widely regarded as “clearly against the spirit of the law,” as noted by officials.
Criticism of this practice gained traction following a report by consumer advocacy group Choice, which earlier this year highlighted that some insurers had implemented price increases of up to 47% over a span of three years.
In addition to supporting the proposed legislative changes, the AMA is advocating for stringent penalties to be levied against insurers that persist with phoenixing once the new regulations are in place.
The AMA is also calling for serious penalties to apply for insurers that continue phoenixing once changes in legislation are rolled out.
“There are just a few insurers that dominate the market in Australia, and given their extraordinary financial resources and profitability, severe penalties must be in place to deter illegal behaviour,” McMullen said.
