Australia's largest not-for-profit health fund, HCF, and Western Australia's largest health fund, HBF, are considering a merger that would see the new entity hold approximately an 18.4% market share and provide members of both funds the benefits of scale required to compete with larger private health insurers.
The merged entity would be the biggest health insurer behind Medibank and Bupa. Sydney-based HCF is currently the third biggest health insurer in Australia while HBF is the fifth largest.
The merger is a logical fit, given both funds’ not-for-profit structure and member-first approach. Any merger will be subject to regulatory approvals and other conditions. The respective boards and councillors of HCF and HBF, responsible for ensuring members’ interests are protected, must approve the proposed merger, HCF said in a statement released yesterday.
Ms Sheena Jack, HCF’s CEO and Managing Director, said a merger of HCF and HBF would give the not-for-profit health insurers a greater voice in the industry. She said: “This merger of equals would provide a significant increase in size which will enable greater benefits to be passed on to members. Strategically, this merger would create a truly national player with combined strength to grow both brands and better compete in what is a challenging industry.”
HCF Chairman, Robert Goaley, said: “Combined, we could reduce upward pressure on premium increases due to an enhanced competitive position in the market and offer a superior customer experience.”
Key details of the proposed merger include:
- A merged entity would have a combined asset position of A$4.0 billion (US$3.2 billion), enabling reinvestment in the business and minimising future premium increases.
- If approved by the Councillors of both organisations, the merger could be completed in the middle of the year following regulatory approvals, including the ACCC and APRA. Until these approvals are obtained, HCF and HBF will continue to operate as they currently do.
- If approved, an entity will be established with a Board comprising equal numbers of directors from HCF and HBF. All HCF and HBF councillors will be offered the opportunity to maintain their governance roles over the merged group. ? After any merger, there will be a transition period in which the operations of HCF and HBF will be combined.
HCF, leading not-for-profit health fund protecting Australians since 1932, covers over 1.5 million members with health and life insurance, travel and pet insurance.
HBF has been Western Australia’s leading health insurer for more than 75 years and remains one of the best known and respected brands in WA. With over a million members and 8% of the Australian health insurance market, it is the second largest not-for-profit health insurer in Australia. Almost 90% of HBF’s members reside in Western Australia.