The Federal Government has approved an average increase of 6.2 per cent for health insurance premiums next year.

Health Minister Peter Dutton says all 34 Australian health insurers applied for fee increases.

"We moved to make the changes easier for consumers to understand and to lower implementation costs which would only have increased cost pressures on the industry," he said in a statement.

Insurer NIB will raise its premiums by an average of 8 per cent next year.

The share market-listed insurer's chief executive Mark Fitzgibbon says the rise was necessary to meet the rising costs of providing health care services.

"In financial year 2013, NIB paid out more than $1 billion in benefits to customers," he said in a statement.

"That's an increase of more than 10 per cent on the previous year."

Insurance premium increases NIB 7.99 per cent

7.99 per cent The Hospitals Contribution Fund of Australia 6.89 per cent

6.89 per cent Australian Unity 6.62 per cent

6.62 per cent Phoenix Health Fund 6.52 per cent

6.52 per cent Medibank Private 6.49 per cent

6.49 per cent BUPA 6.35 per cent

6.35 per cent Industry weighted average 6.20 per cent

The increase from NIB was the highest among the 34 insurers and comes after a 6.5 per cent increase last year.

Its share price surged by 1.2 per cent after the announcement and just before midday (AEDT) was trading at $2.47.

Medibank Private will raise its premiums by an average of 6.5 per cent, while Bupa will increase its fees by 6.4 per cent.

Last year, Medibank raised its premiums by 6.2 per cent and Bupa raised its fees by 5.8 per cent.

Dutton blames Labor for size of increase

Opposition health spokeswoman Catherine King says the Government did not have consumers in mind when it approved such a large increase.

"The last time you have to look for an increase this high was the last time the Liberals were in government," she said.

"This is the highest private health insurance increase approved since 2005 - almost a decade.

"Frankly, it's entirely cynical for the Abbott Government to sneak this out two days before Christmas."

But Mr Dutton says the increases would have been lower had it not been for "the pressures placed on the sector by Labor".

"Each application has been closely scrutinised to ensure the increases sought are fully justified," he said.

The Government estimates the health insurance industry's overall cost of paying out benefits increased by 8 per cent during the past year.

Mr Dutton says he is confident that competitive pressures in the industry would help keep premium increases "as low as possible".

Each application was examined by the health insurance regulator, the Private Health Insurance Administration Council.

Concerns raised about affordability

Matt Levey from the consumer group Choice says the accumulation of premium increases over past few years has made health insurance less affordable for many households.

"With increases over time running well ahead of the consumer price index, it is obviously something that would be taking up a higher portion of household expenses than it would otherwise," he said.

"And it's not limited to health insurance. We've seen increases in home and contents insurance as well, which is being raised as an affordability issue and as an under-insurance issue."

Mr Levey encourages consumers to put brand loyalty aside when looking for the cheapest insurance policy,

"With any sort of product like this, where consumers tend to auto-renew and stick with the trusted brand, it can often lead to us not being as critical about price increases as we should be," he said.

"So people should be testing the market. Look at your current cover, and look at your current provider and don't find yourself paying a premium for the fact that you're not shopping around."