Customers cancel health insurance due to cost of living crisis
Private health insurance giant Medibank is attracting fewer customers than expected as cost-of-living pressures increase and growing competition pushes Australians to rival companies.
However, more and more foreign students and expatriate employees chose Medibank’s policies, which contributed to the increase in company numbers.
When it released its full-year 2024 results on Thursday, the insurer reported net income of $492.5 million, up nearly 60 percent from the previous year.
Underlying net profit after tax increased 14 percent to $570.4 million.
Over the past 12 months, Medibank lost 3,400 Australian policyholders, a net decrease of 0.2 percent, while its subsidiary AHM gained 17,800 domestic customers.
This corresponds to growth of 0.7 percent and was therefore lower than expected.
David Koczkar, chief executive of Medibank, said it had been a challenging year.
“While this was not our stated goal, given the competition in the market, we remained disciplined about the best opportunity for long-term growth,” he said.
“Our disciplined approach makes us strong and sustainable and will support our long-term growth as a healthcare company.”
The average increase in Medibank premiums was below the rate of inflation and wage increases, but cancellation rates rose as more customers switched providers.
As shown in the full year results, a higher proportion of AHM customers decided not to renew their insurance policies compared to Medibank customers because they were more price conscious.
A 25 percent increase in non-resident insurance units, driven by foreign students, helped to counteract the decline in customer numbers.
“The outstanding growth in the student market reflects our strong relationships with universities – Medibank is the preferred provider of international student health insurance for almost half of Australian universities,” Mr Koczkar said.
He noted that Australia’s health sector is struggling with rising costs, the impact of the COVID-19 pandemic and changing patient needs.
In response, Medibank offered $63 million in financial support to private hospitals.
“We continue to think about how we can support the sustainability of hospitals without driving up premiums,” said Koczkar.
“We want the private hospital sector to be strong.”
