New Analysis Shows Billion Dollar Health Insurer Profits

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MTAA has called out the corporate health insurance industry’s profiteering as families do it tough during the cost-of-living crisis.

New analysis of data released by the Australian Prudential Regulation Authority (APRA) shows in the year to March 2024, corporate health insurers’ after-tax profits grew by 34% to a record $2.13 billion, compared to the previous year to March 2023. Insurers are profiting while the proportion of premiums they returning to their customers has fallen from 88.03% in 2019-20 to 82.61% in 2022-23.

Corporate health insurers also saw their ‘management expenses’ – executive bonuses, salaries, marketing spend – grow from $2.82 billion to $3.45 billion in the year to March 2024, an increase of 19%.

Claims by the corporate health insurer lobby group, Private Healthcare Australia, that the Prescribed List (PL) was to blame for increased pressure on premiums has been resoundingly refuted by health sector stakeholders, with analysis showing the average benefit payments insurers pay for the PL (medical devices) has decreased by 17% since 2016. 

In fact, the APRA data analysis shows Australia’s MedTech industry has delivered more than $2.5 billion in savings to health insurers since 2017 – savings insurers are yet to pass on in full to consumers.

MTAA CEO, Ian Burgess, called out the corporate health insurance lobby’s blame shifting on pressures driving up insurance premiums pointing to Medibank’s expenses ratio as an example of how health insurers can in fact ease the pressures by not spending as much on themselves.

“There is almost $1 billions worth of savings insurers could be delivering to consumers if the rest of the health insurance industry followed Medibank’s management expenses ratio,” Mr Burgess said.

“Unfortunately, the facts and the analysis show where the money is really going – into health insurers own pockets.”