Health funds fighting fit

The nation's 42 private health funds are prudentially sound and capable of sustaining increased numbers of claims by members over the next year, according to the Private Health Insurance Administration Council, Australia's health funds industry regulator.

PHIAC has placed two funds into administration over the past 12 months, WA's Goldfields Medical Fund and Victoria's IOR Health Fund, and speculation was rife that the council would force more funds into voluntary administration. But PHIAC's CEO Gayle Ginnane said the other 42 funds comply with prudential requirements and the industry as a whole is “prudentially sound”. She did state, however, that mid-sized funds are likely to enter into mergers due to cost pressures.

The business of private health insurance is getting more complicated and merger activity is likely to increase, Ms Ginnane said. About 86 per cent of the market is dominated by the 10 largest funds but most of the other health insurers are small state-based funds.