Competitive constraints in private health insurance raised—but a broader debate needed

Image source: Victorian Health Department

Competition in the private health insurance market is the focus of a recent discussion paper released by the independent regulator, the Private Health Insurance Administrative Council (PHIAC). The paper is the first prepared by the new Premiums and Competition Unit (PACU) which was established in the last budget to help foster competition in the Australian private health insurance market. The paper aims to ‘promote discussion and stimulate comment on the nature of markets and competition’ in private health insurance, with a view to feedback informing a final report due for release in early 2013.

Market concentration in the banking sector - household loans

Recently, there has been considerable concern amongst politicians, the media and the broader community regarding competition in the Australian banking sector. Specifically, concerns have been raised regarding banks increasing certain lending rates over and above rises in the RBA’s official cash rate, particularly for housing loans. This observation has led to a debate about collusion and ‘price-signalling’ within the banking sector. This post examines data from the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) on market shares and concentration in the household lending sector to see whether there has been any increase in the capabilities of financial institutions to use market power to their advantage.