Regulation changes have led to constrained membership numbers, slowing revenue growth.
Melbourne, Australia (PRWEB) October 14, 2013
The Health Insurance industry is an integral part of the Australian health system, providing coverage to almost 47.0% of the population. Health insurers generate revenue from the sale of health insurance policies (premium income) and the investment of premium reserves (investment income). Premium income generally accounts for more than 95.0% of revenue, though this changes from year to year. Industry revenue is forecast to grow by 3.8% over 2013-14, to reach $19.7 billion, on the back of strong growth in premium income. Over the five years through 2013-14, industry revenue is expected to grow at an annualised 6.5%.
IBISWorld Industry analyst Sebastian Chia states “the gain in premium income will be propelled by higher private health insurance prices and membership.” This has led to premium income growth of an estimated annualised 7.8% over the past five years to $19.1 billion. Investment income is also contributing to the solid performance, as local markets post strong increases despite global economic uncertainty. Healthy revenue growth will translate into a stronger bottom line for the industry. Health insurers' largest expense, benefit payments, is expected to grow as a proportion of income, as benefit costs and utilisation increase and the membership profile ages. Premium prices are expected to be announced yearly to counterbalance these increases, and the recent trend has been a constant increase of above 5.0% per annum. According to Chia, “the industry will work to limit the effect of these rising costs by minimising growth in management expenses through investment in online service platforms and other labour-saving technologies.”
IBISWorld classifies the Health Insurance industry as having a high level of market share concentration. In 2009-10, the revenue share of the top four companies reached 69.4% as BUPA acquired MBF and Medibank purchased Australian Health Management. In the past five years, smaller major players NIB, HCF and HBF have managed to gain some ground on the much larger BUPA and Medibank, while the total market share between the five major players has not changed a great deal. Consolidation is expected to occur over the next five years due to the pressures the industry faces relating to competitiveness and profitability, partly brought on by the increase in the Medicare Levy Surcharge threshold and changes in the PHI Rebate. It is expected that some of the industry's larger players will acquire struggling smaller players, resulting in a decline in the number of industry enterprises. The industry’s major players are BUPA Asia Pacific, Medibank Private, Hospitals Contribution Fund, HBF Health and NIB Holdings. For more information, visit IBISWorld’s Health Insurance report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry includes businesses that primarily underwrite insurance policies relating to health and medical risks. Underwriting insurance policies involves assuming risks and assigning premiums. The type of insurance cover provided by businesses operating in this industry is for hospital, medical, dental, pharmaceutical and funeral expenses or costs. Businesses within this industry generate revenue not only through insurance underwriting but also by investing premiums.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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