[vc_row][vc_column][vc_column_text]In an unprecedented move for the prudential regulator, APRA has called out the industry for being too reliant on lobbying government to provide solutions and underprepared for the challenges that lie ahead.
According to APRA Senior Manager Peter Kohlhagen in a speech to the Health Insurance Summit in Sydney last week, “we aren’t convinced that any insurer yet has a robust strategy for managing the risks”, and that “the current environment is likely to lead to consolidation if it continues for an extended period.”
Mr Kohlhagen emphasized that insurers will need to have a “Plan B” in the event of failure, and that for many that “Plan B” would most likely be a merger.
He also said that “APRA will not hesitate to act to protect the interests of policyholders should it become necessary due to viability concerns with an insurer.”
“That can take the form of an orderly merger or other exit from the market. Importantly, an insurer that has a plan and executes it when it becomes necessary can control its own destiny. An insurer that fails to plan will find that it loses that opportunity.”
With 82 per cent of Australian households concerned about the cost of private health insurance, the rising costs of healthcare and the confusion brought on by the Government’s recent gold/silver/bronze/basic reforms, the risks facing the industry are very real.
APRA’s letters points to active measures that could be taken by health funds to improve industry practices and boost sustainability, such as facilitating substitutes for in-hospital treatment, revising health supplier contracts and developing preventative health and well-being offerings for their members.[/vc_column_text][/vc_column][/vc_row]
