WA health insurer HBF to swoop east as premiums continue to climb


“The WA sleeping giant, after 80 years, is finally going to offer its services around the east coast.”

Mr Van Der Wielen said he would be actively looking to merge with or potentially buy smaller funds in the crowded health insurance market.

That follows warnings from the financial regulator that many funds would either “merge or fold” amid an industry crisis the Grattan Institute has called a “death spiral”.

“We have 37 insurers – it’s too many,” Mr Van Der Wielen said, suggesting the number needed to drop to 20 to be sustainable, based on comparable markets.

He said the “oversupply” was “OK in the past, but now … capital requirements have gone up, technology costs have gone up and you need scale to compete”.

HBF overhauled its own technology system over the past two years, he said, which has given it confidence to branch out Australia-wide.

The Australian Prudential Regulation Authority (APRA) on Tuesday said that only three insurers would have a sustainable business model by 2022 if the industry’s current trajectory continued.

The private system is facing rising hospital costs and rising premiums, which in turn is causing an exodus of young, healthy members whose funds are used to subsidise the care of older and sicker members.

Nationwide, private health coverage has fallen from 45.5 per cent of the population in March 2018 to 44.1 per cent today – the lowest level since June 2007, according to APRA data.

Mr Van Der Wielen said the industry should look at consolidation as a priority, followed by looking to health providers and government for assistance.

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Amid consumer gripes over costs, Mr Van Der Wielen said HBF would be using its low premium increases and clean complaints record with the customer ombudsman as key selling points.

HBF premiums rose by 1.9 per cent in 2019 and will rise 2 per cent this April – the lowest of any fund – compared with an industry average increase of 3.2 per cent and 2.9 per cent respectively.

The 1 million-member strong fund has employed its first workers in Melbourne and intends to open retail shopfronts there in May followed by other capital cities.

Expanding east will also diversify HBF’s insurance book, which leans older and is tied to the fortunes of WA’s boom-bust economy.

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Mr Van Der Wielen said HBF held $3000 in excess capital per member above APRA requirements, which made it one of the financially healthiest funds in the country.

HBF took in $1.68 billion in premiums last year and had a net surplus of $93.6 million, which included $66 million from equity investments.

HBF came close to merging with Sydney-based not-for-profit HCF two years ago, which would have created the third biggest player in the market with an almost 20 per cent market share.

However, the $4 billion deal fell over after the insurers decided that a merger was not in their members’ “best interests”.

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