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Category: Insurance / Health Insurance

Health insurer profits jump, life insurers look sick

Tuesday, 15 Nov 2016 09:52:16 | Stephen Letts

Medibank Private was the only big insurer to lose customers.

Health insurers have benefited richly from another jump in policy premiums with profits up 28.3 per cent over the past 12 months.

Australian Prudential Regulation Authority (APRA) quarterly figures for the health insurance industry show net profits for the September quarter rose to $1.4 billion from $1.1 billion at the same time last year.

The increase was driven by an almost 6 per cent rise in premiums agreed to by the Federal Government earlier this year.

That in turn has translated into a solid increase in net margins from 4.5 per cent to 5.3 per cent over the year, while claims inflation has been benign.

Over the 12 months to July, health insurers added 87,000 new policy holders, an increase of 1.3 per cent.

However, within the industry performance across the funds has varied.

Industry leader Medibank Private was the only big insurer to lose customers, dropping almost 60,000 or 3.8 per cent, although its extras-light, budget brand ahm added almost 14,000 new policyholders.

Medicare's nearest rivals Bupa, nib and HBF grew their policy bases by between 2 and 4 per cent, while smaller, third-tier insurers GMHBA and Teachers' Health grew by 8.6 per cent and 6.4 per cent respectively.

Life insurer profits plunge

The news for life insurers is far grimmer.

Net profit fell almost 13 per cent from $3 billion to $2.6 billion in the 12 months to September as customers let their policies lapse.

Total assets in the life insurance sector fell 23 per cent to $225 billion and the return on assets fell by 24 basis points to 10.9 per cent.

The big life insurers have seen their life-blood of investment income tumble in recent years, while battling competition from products offered through superannuation funds.

Total revenue in the sector fell 16 per cent to $9.9 billion, which largely reflects a fall in investment income from $7.1 billion to $4.8 billion over the quarter.

AustraliaPlus


 

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