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The merging of companies in the health insurance industry will continue, but its pace will be dependent on both economic factors and the appetite of companies for change, according to Mark Fitzgibbon, Chief Executive Officer of nib health funds.
Mr Fitzgibbon will be addressing the CEO Roundtable Discussion at the 8th Annual Health Insurance Summit on July 29 in Sydney.
nib recently formed a strategic alliance with National Australia Bank and Mr Fitzgibbon believes convergence of financial services products and maybe the companies themselves will become more prominent in the future.
“I think it will be something which will naturally evolve,” Mr Fitzgibbon said.
“We are moving in a direction of convergence, so I certainly foresee a time in a not too distant future whereby you procure all your financial services from a single provider.”
”It makes a lot of economic sense to have a common brand, distribution platform and service, and as technology develops, this is becoming easier. It also makes a lot of sense from the perspective of the customer experience.”
Mr Fitzgibbon added that with Governments currently funding 70 per cent of Australia’s health care expenditure they cannot afford to sustain this level of relative spending into the future.
“It is an inconvenient truth for some that the private sector and individuals have to play a greater role in our health care funding, particularly those individuals that can afford to do so. And obviously private health insurance is a mechanism for doing that,” Mr Fitzgibbon added.
In his presentation titled ‘Unlocking member value – the compelling case for demutualisation, Mr Fitzgibbon will deal with why from an organisational and member’s perspective there is no longer a need to maintain a mutual company structure.
“Conceptually, once a mutual starts to move beyond its original community customer base, it ceases to become mutual. It competes and becomes no different to competitors such as nib, while mutuals also seek a return on the funds invested in their companies just like we do.”
“The upside for mutuals may be that they don’t pay tax, but I’m not sure how sustainable that position is. Instead why not unlock the wealth for the members as nib, MBF, ahm and Manchester unity have. In fact, given the overwhelming member support for the demutualisation of nib and the others, I can’t imagine how the management and Directors of the remaining mutuals can possibly deny their members the same opportunity to at least decide the question.”