Better health and ageing for all Australians

Private health insurance

Schedule - Request for Approval to Change the Premiums Charged Under a Complying Health Insurance Product

This page provides a information on the Request for Approval to Change the Premiums Charged Under a Complying Health Insurance Product

In this section:

Printable version of Schedule - Request for Approval to Change the Premiums Charged Under a Complying Health Insurance Product (PDF 105 KB)

Schedule: Approved form to apply for approval of premium changes

Authorisation

This page and the following 3 pages forms the Schedule to the instrument signed by the delegate of the Secretary to the Department of Health and Ageing on 18 October 2012 being an approval of the 'approved form' in which a private health insurer must apply pursuant to Section 66-10 of the Private Health Insurance Act 2007 for approval of a proposed change to the premiums charged under a complying health insurance product.

Approved form

Applications from private health insurers consistent with this Schedule will represent the approved form for the purposes of an insurer applying for approval of premium changes.

Applications for premium changes must include:

1. A cover letter

a) Signed by the Chief Executive Officer and two non-executive directors of the insurer; or in the case of an insurer without two non-executive directors signed by the Chief Executive Officer and accompanied by a supporting resolution of the Board.

2. Written report which sets out the following criteria:

a) insurer name;

b) date of effect of premium change(s);

c) percentage increase in forecast contribution income (FCI) resulting from the premium change(s) excluding forecast changes in membership, and including rate protection; expressed to two decimal places, for the 12 month period following the implementation of the changes, calculated as follows:

(FCI with premium changes – FCI without premium changes) x 100
FCI without premium changes

d) percentage increase in forecast contribution income (FCI) resulting from the premium change(s), excluding forecast changes in membership, and excluding rate protection; expressed to two decimal places, for the 12 month period following the implementation of the changes, calculated as follows:

(FCI with premium changes – FCI without premium changes) x 100
FCI without premium changes

e) description of the reason(s) for the change(s), including an account of the actual experience of the insurer since the previous premium changes and the insurer’s forecasts up to and including March 2015. This description must include information on the following :
  • components of premium change;
  • drawing rates;
  • membership;
  • upgrades/downgrades;
  • waiting periods;
  • cross subsidisation;
  • gross and net margins;
  • capital management;
  • management expenses;
  • dividend payments, distributions or capital returns;
  • levies;
  • investments;
  • taxation;
  • exclusions;
  • restrictions;
  • excesses;
  • co-payments;
  • extended family;
  • 3+ Adults;
  • single parents;
  • corporate products;
  • rate protection and/or pre-payments;
  • hospital contracting;
  • current and/or proposed chronic disease management programs and hospital-substitute treatment;
  • closed products;
  • new products;
  • effect of relevant changes in legislation, regulation, or Government policy;
  • proposed rule changes; and
  • other relevant matters.
f) a statement that the changes are consistent with the Private Health Insurance Act 2007 and associated Private Health Insurance Rules.

g) a statement indicating whether or not consent is provided for the insurer’s average premium change to be publicly released; the reasons if consent is declined.

h) an opinion from the Appointed Actuary for the insurer on the financial forecasts, including the assumptions, and appropriateness and sufficiency of the financial model.

i) the contact details of a both a primary contact person an alternate contact person. The name, position title, telephone number, mobile phone number, fax number, e-mail address and dates of availability must be provided for both contacts.

3. Product pricing changes as follows:

Insurers must provide information about individual products for which a premium change is sought as follows:
  • State/Territory;
  • product code;
  • product name;
  • product status;
  • corporate product statement;
  • product type;
  • insured group;
  • level of hospital class;
  • level of general class;
  • annual excess;
  • co-payments;
  • exclusions;
  • restrictions;
  • 2012 monthly premium;
  • 2013 monthly premium;
  • number of people covered; and
  • number of policies.
This information must be provided as set out in Template A in Attachment B. The product information should be provided as at 30 September 2012.

4. Financial information as follows:

a) Insurers must provide actual results for the month end 30 September 2012 and forecasts on a monthly basis for the period from September 2012 to March 2015 for the:

i. Profit & Loss
ii. Balance Sheet
iii. Solvency Reserve determined in accordance with Schedule 2 of the Private Health Insurance (Health Benefits Fund Administration) Rules 2007; and
iv. Capital Adequacy Reserve determined in accordance with Schedule 3 of the Private Health Insurance (Health Benefits Fund Administration) Rules 2007;

b) The financial information must cover the period from September 2012 to March 2015. This information must be provided as set out in Template B in Attachment B.

5. Snapshot as follows:

Insurers must provide a snapshot of key information as follows:
  • insurer name;
  • abbreviation;
  • for-profit/not-for-profit status;
  • open/restricted status;
  • date of effect for 2013 premium change(s);
  • brief reason(s) for premium change(s);
  • total benefit outlay growth for the period 2010-11 to 2014-15;
  • hospital benefits growth per single equivalent unit (SEU) for the period 2010-11 to 2014-15;
  • Lifetime Health Cover loading revenue for the period 2010-11 to 2014-15; and
  • percentage increase in forecast contribution income for the periods commencing 1 April 2013 to 1 April 2015, consistent with the formulas in 1(c) and 1(d).
This information must be provided as set out in Template C in Attachment B.