In its 16th annual report released on Wednesday, the Australian Competition and Consumer Commission (ACCC) stated that the private health insurance industry in Australia makes customers choose policies that could yield them higher interests.

The ACCC observed that health insurance companies are cheating on their policy buyers by letting them choose lower-priced policies that do not offer adequate coverage. The regulator looked at the matter when many consumers were found complaining about the system.

“A range of factors contribute to this complexity, including regulatory settings, the sheer number of policies available, the range of benefits and exclusions, preferred provider arrangements, policy variations and differing terminology between funds which makes comparison difficult,” the ACCC said. Poor communication and information, as with other Australian industries, was also found to be a common problem in the insurance sector.

There are currently over 20,000 varied health insurance policies available in the market, which are sold by 34 registered insurance providers. Over 80 percent of the policies are offered by the five biggest health insurance providers. Overall revenue generated by the industry amounts to more than AU$21 billion with an annual profit totalling to AU$1.5 billion.

The regulator found that the insurers were at risk of violating insurance laws even if a contract allowed them to undertake an activity. This is due to the variation in contract clauses from one service provider to another. “Such unilateral variations may constitute unfair contract terms ... particularly if the term is not transparent and causes consumer detriment,” the commission’s report presented in the Senate stated.

“In some circumstances, failing to inform consumers about policy changes can amount to false, misleading or deceptive conduct.”

Australia’s peak body Private Healthcare said that if there is any such breach taking place, proper action must be taken. In case no action is taken, it will be unfair to the industry policy sellers who have a clean image, chief executive Michael Armitage said.

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