Melbourne, Australia (PRWEB) September 25, 2014
The Health Insurance industry is an integral part of the Australian health system, providing coverage to almost 47.0% of the population. Health insurers generate revenue from the sale of health insurance policies (premium income) and the investment of premium reserves (investment income). Premium income generally accounts for more than 95.0% of revenue, though this changes from year to year. Industry revenue is forecast to grow by 3.8% in 2014-15, to reach $ 20.6 billion, on the back of strong growth in premium income. Over the five years through 2014-15, industry revenue is expected to grow at an annualised 4.9%. According to IBISWorld industry analyst Andrei Ivanov, over the past five years, growth in premium income has been propelled by higher private health insurance prices and membership numbers. This has led to premium income growth estimated at 3.3% annualised over the five years through 2014-15, to reach $ 20.0 billion. Investment income has also contributed to the industry’s solid performance, as local markets have posted strong increases despite global economic uncertainty.
Healthy revenue growth will translate into a stronger bottom line for the industry. The industry’s largest expense, benefit payments, is expected to grow as a proportion of revenue, as benefit costs and utilisation rates increase, and the membership profile ages. Premium prices have been steadily growing by over 5.0% per annum, to counterbalance these increases. The industry will work to limit the effect of these rising costs by minimising growth in management expenses, through investment in online service platforms and other labour-saving technologies, says Ivanov. In 2015-16, revenue is expected to grow, as health insurers continue to benefit from a rebounding economy, growing investor confidence and continued strengthening in the premium cycle. Profit is expected to increase marginally over the next five years, in line with the industry winning approval for larger price rises, thereby offsetting the profit-eroding effects of increasing benefit expenses.
IBISWorld classifies the Health Insurance industry as having a high level of market share concentration. In the last couple of years, smaller major players NIB, HCF and HBF have managed to gain some ground on the much larger BUPA and Medibank, while the total market share between the five major players has not significantly changed. Consolidation is expected to occur over the next five years, due to the pressures the industry faces relating to competitiveness and profitability, partly brought on by the increase in the Medicare Levy Surcharge threshold and changes in the PHI Rebate. Some of the industry’s larger players are expected to acquire struggling smaller players, resulting in a decline in the number of industry enterprises.
For more information, visit IBISWorlds Health Insurance industry in Australia report page.
This industry includes businesses that primarily underwrite insurance policies relating to health and medical risks. Underwriting insurance policies involves assuming risks and assigning premiums. The type of insurance cover provided by businesses operating in the industry is for hospital, medical, dental, pharmaceutical and funeral expenses or costs. Businesses within the industry generate revenue not only through insurance underwriting but also by investing premiums.
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IBISWorld industry Report Key Topics
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nations most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.
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