Oftentimes, one wonders if Australians require private health insurance when every resident benefits from the government-funded Medicare. There are several reasons for Australians to opt for private health insurance. Predominant among these are tax rebates, choice of doctors, funding treatment costs in private hospitals and ancillary medical benefits such as dental, optics and physiotherapy that are not covered by Medicare. However, with the Private Health Insurance Ombudsman receiving 5,750 complaints in 2017 regarding high increase in insurance premiums, the question comes back to haunt Australians.
Australia’s current health insurance market is a combination of for-profit, not-for-profit and membership funds catering to a specific group or industry. Their nicheness combined with their coverage of ~25% of healthcare services that do not come under Medicare’s ambit makes this industry scour for ideas to gain a strong customer base. This especially in an industry of disgruntled consumers who shell out hundreds of dollars annually on covers they may seldom use. The additional woe of unstructured out of pocket expenses during a treatment adds to the misery.
The recent reforms introduced by the Department of Health is set to make private health insurance more affordable and less complex for customers to understand. While many of these reforms are expected to come into effect on April 1, 2019, it is an interesting period to watch its impact on existing health insurance providers and the methods they will adopt to grow their footprint. The health department’s proposition to divide health insurance products into Gold, Silver, Bronze and Basic categories is expected to provide customers with greater clarity around medical services that they will be paying for. This will help them compare the 70,000 insurance policies offered by a gamut of health insurance providers on an apples-to-apples basis to make a more informed decision. While suggestions for reforms have been making headway over the last few years, and with the government keen on implementing them in the coming year, Engaged Strategy studied customer engagement in this key area that is showing signs of dynamic improvements.
Engaged Strategy’s Intelligent Industry Analytics in the health insurance sector based on over 1000 Australian customers found an average Net Promoter Score (NPS) of only -2 per cent which can be attributed to the customer concerns stated earlier on in this article. AHM emerged as the strongest player with an NPS of +3 per cent, gaining a strong lead over the industry’s lowest score of -26 per cent. Engaged Strategy’s perform across a range of brand and customer experience attributes in the health insurance space. This study assessed customer responses for HBF, Australian Unity, Bupa, AHM, HCF, Medibank/ Medibank Private and NIB. A strongpoint that emerged from this study was AHM’s value for money proposition in combination with a consistently positive customer experience as the key differentiator to attracting customer loyalty.
Since the 1990s, the government has encouraged Australians to opt for private health insurance. This has witnessed a spurt in the number of service providers.
Unlike a few insurance brands, AHM does not penalise customers for opting non-partner healthcare providers. It also offers value for money with low premium increases as evidenced by Choice, a leading consumer advocacy group.
At a time when consumers rely on online comparison tools to shop for private health insurances of best value and enjoy the privilege of modifying them annually, AHM has successfully stayed ahead of competition by delivering on its value proposition. This makes it a value for money brand making it a key player in the Australian health insurance sector.
In addition, given the upcoming health insurance classification system will ‘de-mystify’ policy comparisons, having a distinct value proposition and great customer experiences will become paramount for brands to differentiate themselves. AHM’s value proposition and quality customer experience is currently resonating well with customers, as evidenced by its status as Most Recommended Brand within health insurance. In a sector that is confusing because of too many options, word of mouth becomes even more critical as it is the most trusted channel where someone else has already done the hard work and can speak from experience. Other brands within this sector would do well to design, embed and deliver unique value propositions and quality customer experiences to compete in this newly transparent environment and drive customer recommendation.