The Australian Prudential Regulation Authority (APRA) has released its quarterly private health insurance (PHI) publications for the September 2020 quarter.
The publications provide industry aggregate summaries of key financial and membership statistics for the private health insurance industry.
COVID-19 and associated economic impacts continued to influence PHI performance during the quarter as the rates of hospital and general treatment utilisation increased with a flow-on increase in the claims paid by the industry, which increased 1.5 per cent to $6.2 billion in the September quarter 2020. The COVID-19 postponement of premium increases by most of the industry continued to impact premium growth, however a large and unexpected increase in membership underpinned most of the growth. Investment income remained volatile.
The industry reported a deterioration in insurance performance during the September quarter 2020 as gross margins fell to 9.9 per cent while net margins improved to 0.8 per cent, helped by a seasonal industry wide reduction in management expense. Investment income continued to be volatile, falling 58.5 per cent over the quarter to $99.3 million, with this being the main driver of the decline in quarterly industry profits.
Key performance statistics for the industry in the quarter:
June 2020 |
September 2020 |
Change (quarterly) |
|
Premium revenue |
$6.1 bn |
$6.2 bn |
1.46% |
Fund benefits (claims) |
$5.4 bn |
$5.6 bn |
1.82% |
Gross margin |
10.20% |
9.88% |
-0.3pp |
Net margin |
-0.43% |
0.77% |
1.2pp |
Net investment income |
$239.0 m |
$99.3 m |
-58.45% |
Net profit after tax |
$158.3 m |
$111.9 m |
-29.30% |
In the year to September 2020, net margins fell to 2.1 per cent, with this being the result of premium growth not keeping up with the rising costs of claims. The weaker insurance performance coupled with falls in investment earnings resulted in a 52.6 per cent decline in net profits after tax to $587.4 million in the year to September 2020.
In the year to September 2020, hospital treatment membership increased by 58,775 persons. Older Australians taking out hospital membership was consistent with this longer-term industry trend, with membership in the 50+ age group increasing by 70,589 persons in the year to September 2020, while membership among younger people (aged 20 to 49) declined by 9,318 persons in the year to September 2020. Hospital coverage as a share of the population fell to 43.8 per cent (44.2 per cent at September 2019), continuing a longer-term decline.
Key performance statistics for the industry in the year ended:
September 2019 |
September 2020 |
Change (annual) |
|
Premium revenue |
$24.7 bn |
$24.8 bn |
0.52% |
Fund benefits (claims) |
$21.4 bn |
$22.0 bn |
2.69% |
Gross margin |
13.30% |
11.44% |
-1.9pp |
Net margin |
4.16% |
2.14% |
-2.0pp |
Net investment income |
$447.4 m |
$131.9 m |
-70.52% |
Net profit after tax |
$1.2 bn |
$587.4 m |
-52.60% |
Copies of the September 2020 quarterly publications are available on APRA's website at: Quarterly private health insurance statistics.
