Australian Prudential Regulation Authority outlines how it advises on private health insurance premium increase requests

The Australian Prudential Regulation Authority (APRA) published an explainer on the annual private health insurance (PHI) premium round, setting out how it supports the Department of Health, Disability and Ageing and the Minister for Health, Disability and Ageing in reviewing insurers’ applications to change policyholder premiums. APRA’s role is to advise on the prudential implications of each application, including whether the request could lead to an “adverse prudential outcome” such as an insurer being unable to pay claims or sustain its business, while ministerial approval remains the legal requirement for any premium change. The PHI premium round typically involves all insurers applying at the same time, with applications usually submitted in November for changes to apply from 1 April the following year. The Department publishes the application form in September, with APRA collaborating on its design and the information to be collected. APRA conducts financial analysis of each insurer in early October, drawing on annual returns, the appointed actuary’s annual Financial Condition Report and supervisory engagement, and assesses each premium application against factors including capital maintenance, claims cost coverage, uncertainty in key assumptions and sustainability risks; its advice is incorporated into the Department’s briefing to the Minister and updated if revised information is requested during the approval process.