Private health premiums are changing. Late last year, Minister for Health, Greg Hunt, announced private health insurance reform to give consumers greater clarity about what is and isn’t covered by their premium. From April 1 next year, consumers will be given the option to choose from four categories of private health products – gold, silver, bronze and silver. Each category will be defined by a minimum list of services that must be covered.
So what does this mean for consumers? They are seemingly being given more choice but does the reform translate to greater coverage, or simply greater cost? The government is taking steps to reform the industry but there needs to be greater clarity about what this means for consumers.
Private health insurers should see the reform as an opportunity to not only communicate the changes but also add value for their customers – use the platform to communicate openly and build trust, dissolve uncertainty and create customer loyalty. It also paves the way for creating shared value: creating measurable economic benefit by identifying and addressing social problems affecting health consumers.
Some health insurers already use ‘gold’, ‘silver and ‘bronze’ language to categorise different packages. The reform will set minimum inclusions for each package category, meaning if someone is currently on a package labelled ‘silver’, and that package does not meet the minimum product requirements set by the government under the new silver package category, that consumer may need to move to a different package to receive the same coverage.
Under the new reform, insurers will be able to cover additional products to each package but cannot remove any items listed in the minimum product requirements. They also won’t be permitted to offer partial cover of a product category.
Does this mean the consumer will need to pay more for coverage they currently receive? Or will they be paying the same amount for a package that simply has a new name? Consumers will need clarity.
According to an agenda issued by the Department of Health, insurers are expected to start communicating about the premium changes from February next year. That’s about nine months away, which feels like a long time. But in the world of communications and marketing, to carry out research, collect consumer insights, conduct focus testing, create a competitive strategy and start rolling it out in market – nine months will disappear in a heartbeat.
Like any major industry changes, preparedness is key. Private health insurers can do more than simply communicate the changes – the reforms present the opportunity to create value that benefits both their customers and themselves.
In its 2014 Global Consumer Insurance Survey, EY found that “customer centricity has never been more important across the global industry – and insurers have considerable work to do in developing stronger, mutually beneficial relationships. The time has come for insurers to engage fully in all of their customer relationships and find new ways to deliver value to their customers.” Of particular note is the finding that “insurers have so few interactions with their customers that each one becomes a critical moment of truth”.
Industry changes, like life changes, are a rare and important reason to engage consumers. An example of a consumer focused life insurer is AIA which, through its Vitality program, is creating a platform to be meaningful in the lives of customers – supporting them to be healthier while also reducing the probability of claims. This focus on shared value creation is how insurers can build trust with policy holders.
With any major changes comes a prompt to shop around for the best deal. When consumers start looking around, which providers are they going to look to? A provider that offers the bare minimum or one that creates added value for its customers?