Australia private health insurance net profit plummets by 28% in June

Net profits were mainly dragged down by a fall in investment income.

The Australian Prudential Regulation Authority (APRA) reported a decrease of 28% in private health insurance profits in June compared to a year before.

According to APRA the decline was driven by a fall in investment income, partially offset by higher insurance profits. Investment income fell from $417.48m (AU$604m) in June 2021 to a loss of -$202.52 (-AU$293m) in June this year

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The higher insurance profits were driven by a combination of modest claims experience due to COVID-19-related restrictions and movements in insurers’ Deferred Claims Liabilities (DCL1), partially offset by measures such as premium rate increase deferrals and givebacks to policyholders, taken by private health insurers’ commitment not to profit from COVID-19. 

Premium revenue increased 3.5% over the year to June 2022, mainly reflecting solid growth in membership, whilst fund benefits (claims) increased marginally. APRA reported that these trends resulted in stronger gross and net margins, which increased to 16.9% and 7% respectively. 

Hospital treatment membership increased by 2.1 per cent or 235,699 persons during the year. The growth was broad-based, with membership in the 50+ age group increasing by 2.4% or 112,942 persons and membership among the younger population (insured persons aged 20 to 49) increasing by 1.8% or 74,294 persons.