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.
On 1 March 2016, we announced an industry-first standard pricing model for our health insurance comparison service. Under the new model, all our partner funds pay the same fee for the service we provide.
The reason we’ve moved to a standard pricing model is because we want to be completely transparent about how we get paid. Once our customers know that we get paid the same amount, no matter which health fund they purchase a policy with, then they will understand that when we recommend a health insurance policy to them based solely on their individual requirements and needs.
Our standard fee is split into two instalments: 25% of the first year premium, paid upfront; and 6% of the second year premium#, paid for those customers who remain with their fund into the 13th month. If a customer cancels their policy early, we refund to the fund some or all of the commission we received: 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 and if our fee for a particular fund in any month exceeds 27.75% then we will rebate back the difference to the fund.
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 is 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 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 is complicated and choosing the right policy is often difficult and time consuming. Our comparison services aims to make that process easier and faster, giving our customers peace of mind that they have made the right decision. Our comparison service also helps cost-conscious customers shop around for a better deal or highlights certain expensive product features that a customer may be willing to forego to save money.
Almost all of our customers begin their journey with us via our website so we provide a website 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 but we find the majority 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:
- Postcode because health insurance policies differ depending on your State;
- Age because certain Government loadings and entitlements may apply depending on your age; and
- Family status because different health insurance policies are available depending on whether you are single versus a couple or whether you have kids.
We also ask whether there are any medical needs which are particularly important. For example:
- For hospital cover, are there any major procedures you want to be covered for, such as heart surgery, dialysis, etc.?
- For extras cover, what services are you likely to use, such as dental, physiotherapy, etc.?
If you identify a particular medical need as being important to you then 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 doing your final comparison and making your purchasing decision.
What proportion of the health insurance market do we compare?
There are 33 registered private health insurance companies in Australia (we call them “Funds”).
Some Funds have more than one brand (for example, Medibank is a health fund that offers private health insurance policies under both the Medibank brand and the ahm brand so whichever brand you buy you are still a member of the Medibank Fund).
We currently compare products from thirteen Funds and our ambition is to have all Funds represented in our comparison service. We have a commercial relationship with our thirteen partner funds which means we receive a commission each time one of our customers becomes a member of one of our partner funds.
Each year, the Australian Prudential Regulatory Authority (“APRA”) releases a report that ranks each Fund according to market share. Based on the latest rankings, we currently compare products from eight of the top-10 funds:
- Bupa Australia
- ahm products which are part of Medibank
- HCF, Australia’s largest not-for-profit health fund
- Australian Unity
- GMHBA, Frank and Budget Direct products which are all brands underwritten by GMHBA (these products are available via our website but not our call centre)
Funds outside top ten:
- CUA Health
- TUH Health Fund
- Queensland Country Health, the largest regionally based health fund in Queensland
- Navy Health
We are working hard to welcome on board all Funds that are not currently part of our comparison service and hope to have good news on that front for our customers in the future.
Based on the latest data published by APRA, the Funds whose products we compare have a combined 90.14% share of the Australian private health insurance market. However, we do not compare all products offered by those Funds (for example, we compare ahm products but not Medibank’s own branded products).
It is 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.
One of the brands we compare (Budget Direct) is owned by our sister company, Auto & General Services Pty Ltd, however this does not impact the impartiality of our comparison service.