The Australian Competition and Consumer Commission has found that the health insurance industry is just too complex for ordinary people.
All up, the ACCC says, that makes it difficult for consumers to choose the most appropriate cover.
“It appears there are a number of market failures in the private health insurance industry. In particular, imperfect and asymmetric information impede consumers’ ability to make choices that are likely in their best interests,’’ the ACCC said in its report.
“A range of factors contribute to this complexity, including regulatory settings, the sheer number of policies available, the range of potential policy benefits and exclusions, preferred provider arrangements, policy variations and differing terminology between funds which makes comparison difficult.”
The ACCC found there had been a 16 per cent increase in complaints to the Private Health Insurance Ombudsman in 2013-14 and the trend has continued into 2014-15.
The report also noted reports that insurers are encouraging consumers to downgrade their cover to secure cheaper premiums.
“As a result, consumers are finding themselves more often without the cover they expected,” the ACCC said.
The ACCC said it was reviewing a number of industry practices including bold headline claims that are heavily qualified in fine print. These included for example claims like “no gap” or “100% cover”, when there were significant qualifications and misleading conduct through the use of industry terms or phrases not in plain language.