Hunter-based insurance company NIB will increase its health insurance premiums by an average of 4.10 per cent.
NIB's increase was above the insurance premium average of 3.03 per cent, but the company says after two historically low rises, it had to factor in rising inflation.
NIB chief executive Mark Fitzgibbon, said the increase reflected the return of hospital and ancillary treatment post COVID-19, and a rise in health and medical treatment costs.
The company's two previous increases - 2.72 per cent (2023) and 2.66 per cent (2022) - were the second lowest and lowest in 20 years.
Mr Fitzgibbon said inflation had moved back to long-term trends and it was crucial insurers were able to price for this. However, he said the company was very aware that many household budgets are strained.
"We're doing our very best to maintain affordability, yet spending is growing across healthcare, driven by an ageing population, the rise of chronic conditions and the cost of new technologies," he said.
"We're not sitting back passively responding to inflationary pressure by just lifting premiums.
"We have a range of new measures designed to help members maintain good health as well as reduce out of pocket expenses."
Federal Health Minister Mark Butler, who approves increases across the industry, said the average increase of 3.03 per cent was well below the annual rise in wages (4.2 per cent) and inflation (4.1 per cent).
"I wasn't prepared to just tick and flick the claims of health insurers, as the Opposition was urging me to do," Mr Butler said.
"I asked insurers to go back and sharpen their pencils and put forward a more reasonable offer for the 15 million Australians with private health insurance.
"Private health insurers must ensure their members are getting value for money. When costs rise, Australians want to know that higher premiums are contributing to system-wide improvements, like higher wages for nurses and other health workers and ensuring that affordable services are available."
NIB has recorded a 19.4 per cent jump in profits in the first half of the financial year, with a net profit after tax of $104 million for the six months to December 31.
The group's total revenue was up 12.4 per cent to $1.7 billion and underlying operating profit was up 21.7 per cent to $144.4 million.
Last financial year, the private health insurance industry made a collective profit of more than $2 billion, up from a $1 billion profit the previous year.
Australian Private Hospitals Association chief executive said while health insurances were experiencing record profits, private hospitals were in desperate need of health.
"We have seen a rising number of private hospitals close, while others have stopped providing loss-making services like maternity care," he said.
"If private health insurers want to have a product to sell, they need to up their game and pay for the services private hospitals provide.
"Unfortunately, we will continue to see private hospitals close or reduce services unless health insurance companies put sustainability of the private health sector before their own profits."
