Australia’s private health insurance (PHI) sector is growing, but rising costs, changing consumer behaviours and increasing regulatory expectations are creating new challenges for insurers and consumers. The top five insurers account for almost 80% of the $31.1 billion industry premium revenue, highlighting the importance of scale in an increasingly competitive and rapidly evolving PHI market.
The Private health insurance in focus: insights shaping the sector report explores how affordability concerns are driving members towards lower-cost products, how demographic and claims cost pressures are reshaping the industry, and how insurers are differentiating to strengthen engagement. Insights within the report also examine how leading insurers are balancing affordability and member value to stand out in a highly competitive market.
Private health insurance overview
A snapshot of the private health insurance industry data to 30 June 2025.
Results and analysis
Analysis of Australia’s private health insurance industry performance and trends to 30 June 2025.
The PHI market remains highly concentrated, with the five largest insurers accounting for almost 80% of industry revenue.
As growth and profitability continue to be concentrated among larger insurers, scale becomes an important factor in long-term success and may support insurers in managing regulatory requirements, investing in technology and improving operational efficiency.
The opportunity: As the industry continues to evolve, member engagement, scale, and specialised offerings are likely to influence competitive positioning across the sector.
While overall participation remains stable at around 45%, growth is concentrated among older age cohorts.
Looking ahead: An ageing health insurance membership is associated with higher claims and a less diversified risk pool, raising longer-term questions around health insurance affordability and sustainability.
Recent trends indicate increasing uptake of lower-cost product tiers, alongside a higher prevalence of excesses, co-payments and exclusions within policies.
Younger customers favour Basic, while older customers favour Silver, with Gold sales declining in popularity.
Why it matters: These shifts may reflect changing consumer preferences, affordability considerations, or evolving perceptions of value within private health insurance.
- New entrants are choosing Basic products. This may reflect younger customers looking for more affordable levels of cover when first entering the PHI market.
- Switchers show a clear preference for Silver products, followed by Bronze.
Despite a shift towards lower levels of cover, benefit outflows continue to grow, reflecting persistent medical and broader inflationary pressures.
Average hospital benefits increased by approximately 3% p.a. between 2020 and 2025, despite a broader trend towards lower levels of cover and higher member cost-sharing.
The implication: Maintaining affordability for members while managing claims cost growth remains a key challenge for the industry.
Private health insurers are investing in technology, digital health, customer experience and healthcare ecosystems to differentiate their offerings and strengthen member engagement.
Major insurers are pursuing distinct strategies centred on digital health, care integration and member engagement, signalling a shift from product-based competition to ecosystem-based competition. With growth concentrated among larger players, scale appears to be emerging as a key enabler of innovation, technology investment and operational efficiency.
Examples include:
- healthcare ecosystem integration
- digital transformation
- customer experience transformation
- health and wellbeing ecosystems
- integration of AI and analytics
- innovations and strategic partnerships.
The opportunity: As competition evolves, the ability to deliver value through broader health and wellbeing services may become a stronger driver of competitive advantage.
Private health insurers continue to operate in a highly regulated environment focused on affordability, transparency, consumer outcomes and operational resilience.
As insurers expand their digital health ecosystems and use of member data, maintaining cyber security and protecting customer trust are growing priorities.
The challenge: Against a backdrop of rising regulatory expectations, insurers will need to balance compliance requirements with affordability, operational resilience and member outcomes.
Looking ahead, several key questions will shape the future of the PHI sector. Can private health insurance continue to deliver value and remain affordable as healthcare costs rise? How sustainable is the current risk pool without stronger participation from younger Australians? And to what extent will scale become necessary for long-term success?
As competition extends beyond coverage and price alone, future competitive advantage is likely to be influenced by an insurer’s ability to deliver differentiated member experiences through digital health, AI and integrated healthcare ecosystems.
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An in-depth analysis of the Australian private health insurance industry to 30 June 2025, including market trends and the performance of the five largest insurers.
Get in touch
Our insurance team combines deep sector knowledge and extensive experience to address the risks and opportunities that matter to insurers as they navigate a rapidly changing environment.
If you have any questions about the report, or how we can support your organisation, please contact us via the details below.
- Grace Ng
- David Akers
Frequently asked questions
While participation in private health insurance remains relatively stable, growth is concentrated among older age cohorts, contributing to an ageing risk pool and increasing claims utilisation. At the same time, insurers continue to balance affordability pressures with rising healthcare costs , while responding to growing expectations around transparency, cyber resilience, customer outcomes and operational resilience.
Private health insurance premiums are subject to annual regulatory review and government approval. Premiums face ongoing upward pressure from a range of interconnected factors, including claims utilisation, medical inflation, workforce costs, advances in medical technology, regulatory requirements, and developments in the private hospital sector. As a result, premium increases reflect broader health system dynamics rather than any single cause.
Rising healthcare costs are prompting insurers to explore a range of responses, including investments in digital capabilities, preventative health initiatives, care navigation programs and broader healthcare partnerships. These initiatives are aimed at helping insurers manage claims costs, enhance member services and support the long-term sustainability of the private health insurance system.
Recent industry trends indicate growing uptake of lower-cost health insurance products, particularly among younger members and new entrants to the market. At the same time, the use of excesses, co-payments and policy exclusions has increased. These trends may reflect a range of factors, including affordability considerations, changing consumer preferences and differing healthcare needs. While such product features can reduce premiums, they may also increase out-of-pocket expenses or limit access to certain benefits.
