The Morrison government has announced the smallest increase in private health insurance premiums in two decades, revealing premiums on average will go up 2.92 per cent in 2020.

The figure represents a notable drop from the government-approved increases over recent years, which have ranged from 3.25 to 6.2 per cent, and comes after Health Minister Greg Hunt rejected insurers' requests for increases of 3.5 per cent two weeks ago.

Health Minister Greg Hunt rejected previous premium increase proposals from insurers. Credit:Alex Ellinghausen

"This is the smallest change since 2001 and significantly lower than the 3.8 per cent inflation rate for medical and hospital services this year," Mr Hunt said.

He said it was vindication of the "most significant reforms to private health insurance in over a decade, which is making private health insurance simpler to understand and more affordable for Australians".