Petrol. Groceries. Electricity. Rent. The cost-of-living crisis is squeezing household budgets from every direction, and private health insurance premiums have just joined the list.

From April 1, the average premium rose by 4.41%. Consumer group Choice notes average premiums for some gold cover policies have risen 7.89–25%.

Many people absorb these increases without question. Others may be tempted to cancel their policy.

But there is another option – negotiating a better deal with your insurance company.

Here’s what to think about before picking up the phone.

Why we just keep paying

Human behaviour explains why so many of us renew our health insurance policies without changing our cover or negotiating a better deal.

We’re so afraid of making the wrong change that this prevents us from taking action. Economists call this “loss aversion”. What this means in practice is we are psychologically fearful of removing items from our existing cover (even if we replace them with something else).

Health insurance policies are also complex documents we can struggle to understand. This contributes to what economists call “bounded rationality”. In other words, we choose what to do about our private health insurance based on simplified rules and not on deep analysis. This is especially the case when the topic feels complex and the........

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