How do we make money?
We don’t charge consumers anything to use our comparison service. Instead, we receive a commission from the health funds we partner with each time one of our customers becomes a fund member.
Compare the Market has an industry-first standard pricing model for our health insurance comparison service. Under this model, all our partner funds pay the same fee for the service we provide.
We chose a standard pricing model because we want to be completely transparent about how we get paid. For all products other than Gold hospital insurance, we get paid the same amount no matter which health fund our customers purchase a policy with. They know that when we recommend a health insurance policy to them, it’s based solely on their individual requirements and needs.
Our publicly disclosed rate approach ensures that health funds also enjoy the benefits of our comparison service as a transparent, cost-effective and risk-free marketing channel for acquiring new members.
The service we provide (which can be cheaper than other marketing channels, such as television or Google advertising) helps limit the amount of money funds spend marketing their policies. Funds only pay us a commission when we make a sale on their behalf, so less money is wasted on non-guaranteed marketing activities.
By enabling health funds to acquire new members in such a cost-efficient manner, we can help them reduce their overall marketing spend, which can assist in alleviating pressure on their annual premium increases. This, along with our expert comparisons, can help our customers access better value health insurance policies that suit their individual needs.
Our standard fee for all products other than Gold hospital insurance is split into two instalments: 25% of the first year premium paid upfront, and 6% of the second year premium# paid when customers remain with their fund into the 13th month. For Gold tier hospital insurance policies, we negotiate rates on a case by case basis with each health fund. This ensures a commercially viable outcome for each fund in the current health insurance market.
If a customer cancels their policy early, we refund the health insurer some or all of the commission we received from them: 100% refund if cancelled in the first month, 50% in the second month and 25% in the third month. Based on our experience of cancellation rates over the first 12 months of a new policy, we estimate our new pricing model will equate to a present upfront value* of 27.75% of the first-year premium; if our fee for a particular fund in any month exceeds 27.75%, we will pay the difference back to the fund.
Furthermore, our call centre operators are paid the same amount across all our funds and only receive their commissions if they meet our required compliant and ethical sales conditions.
We pride ourselves on the integrity of our comparison service, so it’s critically important to us that the way we make money doesn’t affect the impartiality of the service we provide to our customers.
# For any of our funds whose systems are unable to process a second-year trail, the standard rate card allows for a single upfront fee of 30% of the first-year premium.
* For the purposes of calculating the present upfront value, we have assumed a fixed discount rate of 13% and a fixed annual premium increase of 5.5%.
How does our comparison service work?
Private health insurance can be complicated, and choosing the right policy is often difficult and time-consuming. Our comparison service aims to make that process easier and faster, giving our customers peace of mind that they have made the right decision. The service also helps cost-conscious customers shop around for a better deal or highlight certain expensive product features that they may be willing to forego to save money.
Almost all of our customers begin their journey with us via our website, so we provide an online experience that allows our customers to decide what factors are important to them and then browse through matching policies. Some of our customers then proceed and buy their health insurance through our website; still, we find that many of our customers prefer further assistance over the phone from one of our trained health insurance specialists.
Many customers don’t know the finer details of health insurance when they first visit our website, so we ask a few basic questions to begin narrowing down the set of potential policies that may best suit them. For example, we ask for your:
- Postcode, because health insurance policies differ depending on your state.
- Age, because certain government loadings and entitlements may apply depending on your age.
- Family status, because different health insurance policies are available depending on whether you’re single, part of a couple and whether you have kids.
We also ask whether there are any medical needs that are particularly important. For example:
- For hospital cover, are there any major procedures you want to be covered for? (e.g. surgery, joint replacements or dialysis).
- For extras cover, what services are you likely to use? (e.g. dental, optical or physiotherapy).
If there’s a particular medical need that’s important to you, we’ll only show you policies that cover those things. Those policies may also cover other medical needs that you didn’t ask for, but you can take those sorts of things into account when making your final comparison and purchasing decision.
What proportion of the health insurance market do we compare?
There are 37 registered private health insurance companies in Australia (known as funds) as of October 2022.
Our ambition is to have all funds represented in our comparison service; we currently have a commercial relationship with our partner funds, which means we receive a commission each time one of our customers becomes a member.
Our partner funds are:
We’re working hard to welcome all funds that aren’t currently part of our comparison service on board and hope to have good news on that front for our customers in the future.
It’s important to all funds to be able to control the rate at which they attract new members. Therefore, some of our funds impose maximum limits on the number of their products we can sell in any given period (normally monthly). Once those limits have been reached, those products will be temporarily unavailable for purchase via our comparison service.
PHIIA Code of Conduct
Compare the Market are proud signatories of the PHIIA Code of Conduct.