How Small Insurance Agencies Can Take the Lead on Fair Premium Pricing ☂️
Private health insurance in Australia is under the microscope. As insurance premium pricing spikes and stories of shady tactics make headlines, more Australians are asking a hard question: Is private cover still worth it? For small insurers and microinsurance providers, this growing distrust isn’t just noise—it’s a once-in-a-generation opening. Done right, pricing can become your strongest differentiator.
Is Price Gouging Behind Insurance Premium Increases?
The average private health insurance premium in Australia rose by 3.73%. For some, like Bupa and NIB, the increase is even higher—5.1% and 5.79%, respectively. That’s around $110 more a year for singles on gold hospital cover and over $200 for families.
For many, this isn’t just frustrating—it feels personal. When insurers report strong profits and still raise prices, it starts to look less like responsible pricing and more like opportunism. And then there’s the “phoenixing” scandal—where health funds quietly retire old policies, only to relaunch near-identical ones at higher prices.
This practice, now under federal investigation, has sparked public backlash. It erodes trust in a product that people rely on in their most vulnerable moments.
If you’re a small or emerging insurer, this is your moment to shine. Why? Because you’re not “them.” And that difference matters more than ever.
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Distrust Over Insurance Products and Premium Pricing
Let’s take Mel, a 32-year-old teacher in Melbourne. She’s not flush with cash, but she’s been diligently paying for hospital cover. Recently, her insurer quietly shut down her plan and moved her to a “new” one—barely different, but noticeably pricier.
Mel’s not a financial expert. She just wants peace of mind without feeling ripped off. But now, she’s eyeing the cancel button. Multiply Mel by 3.3 million—because that’s how many Aussies say they’re thinking about dropping their health insurance this year.
This is where microinsurance and values-based pricing step in.
Can Microinsurance Companies Have Better Premium Pricing?
Microinsurance isn’t about cutting corners—it’s about meeting needs. It offers streamlined, budget-conscious policies for people who are often underserved: gig workers, self-employed tradies, young adults, low-income families. They don’t want deluxe extras. They want simple cover that works.
This model thrives on clarity and affordability, not upselling. And small insurers are uniquely positioned to deliver it. They can design flexible packages, respond to niche segments quickly, and communicate in ways that feel human—not corporate.
Unlike the Big Five, small insurers don’t carry the baggage of bloated policy portfolios or years of profit-maximising strategies. That’s an advantage—if you use it right.
Why Phoenixing is Wrong Pricing for Insurance Products
“Product phoenixing” may help boost margins in the short term, but the long-term damage is severe. Customers catch on. They leave. And their stories spread.
This kind of behaviour reduces pricing to a shell game. Customers don’t mind paying—they mind being misled. Especially when they’re already dealing with a rising cost of living.
As a small insurer, your power lies in doing the opposite. Price ethically. Stay transparent. Show your margins if you have to. People respect honesty—especially when they’re used to the opposite.
A Customer-Focused Insurance Premium Pricing Strategy
Big insurance companies often rely on complex premium pricing, opaque product structures, and buried fees. Small insurers don’t need to play that game.
Instead, focus on these core principles:
1. Radical Transparency
Break down where every dollar goes. Don’t just share numbers—tell a story. For example, explain how much of a premium is used to pay claims, how much is for operations, and what portion goes into reserves. Use language a 12-year-old can understand. When customers see behind the curtain, they feel included rather than manipulated. If you confuse, you lose.
2. Relevance Over Richness
Offer targeted products that fit real life. A freelancer doesn’t need a comprehensive corporate package. A retiree doesn’t want maternity cover. Don’t sell bloated bundles—deliver precision. Relevance shows that you understand the customer’s life. It also minimises the chance they’ll feel forced into paying for extras they don’t use.
3. Consistency Builds Loyalty
Customers should never feel punished for sticking around. Avoid stealth increases and reward tenure. Build in price stability and communicate updates in advance. Trust builds over time—don’t erode it with sudden jumps. Loyalty isn’t won with flashy sign-up deals alone—it’s kept through consistency.
4. Speak Like a Human
Ditch the legalese. Your communication should sound like it comes from someone who cares—not a policy robot. Think about how you’d explain a price change to a friend over coffee. If you wouldn’t say it at a dinner table, don’t say it in your PDS. Human tone fosters emotional connection, and that’s what makes customers stay.
5. Co-Create With Customers
Run feedback loops, surveys, and open forums. Let people tell you what they want and what they don’t. People don’t expect perfection—they expect to be heard. Incorporating customer input doesn’t just improve your offerings—it deepens trust. It signals that you value your community.
6. Signal Your Values
If you’re keeping your price increases low, like HIF did with just a 1.91% rise, say so. Make it part of your story. Highlight what drives your decisions—fairness, sustainability, empathy. Customers are looking for providers that care. This is where pricing becomes brand positioning, not just cost.
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What’s Next for Your Insurance Premium Pricing?
If you’re rethinking how to approach insurance premium pricing—or just want to build more trust with your customers—now’s the time to act. You don’t need to follow the big players to stay competitive. In fact, doing things differently might be your biggest strength. Let’s have a chat about how you can simplify your pricing, connect better with your audience, and grow with confidence. Reach out any time—we’re here to help you make smart, customer-first choices that stick.
For a comprehensive view of ensuring the continuous growth of your business, Download a complimentary brochure on How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth.
Are you a small or medium-sized business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?
If so, please call (+61) 2 8607 7001.
You can also email us at team@valueculture.com if you have any further questions.
