Private health insurance giant Medibank is attracting less customers than predicted as cost-of-living pressures bite and increased competition pushes Australians to rival companies.
However, international students and non-resident workers increasingly took up Medibank's policies, which helped buoy the company's numbers.
During its 2024 full-year results on Thursday, the insurer recorded $492.5 million in net profit, an almost 60 per cent lift from the previous year.
Underlying net profit after tax was up 14 per cent at $570.4 million.
Over 12 months Medibank lost 3400 Australian policyholders, a 0.2 per cent net decrease, while its subsidiary AHM gained 17,800 resident customers.
This represented a 0.7 per cent growth, which was lower than expected.
Medibank's chief executive officer David Koczkar said it had been a challenging year.
"While this is not what we set out to achieve, given the competitive market we remained disciplined about the best way to grow for the long term," he said.
"Our disciplined approach is what keeps us strong and sustainable and will support our long-term growth as a health company."
The average increase in Medibank's premiums was below inflation and wage growth, but lapse rates still increased as more customers switched providers.
Compared to Medibank policyholders, a higher proportion of AHM customers opted not to renew their insurance policies as they were more price sensitive, the full-year results revealed.
A 25 per cent increase in non-resident policy units, driven by overseas students, helped counter lapsing customers numbers.
"Stand-out growth in the student market reflects our strong university relationships - with Medibank the preferred provider of overseas student health cover for nearly half of Australian universities," Mr Koczkar said.
He noted Australia's health sector was struggling to tackle rising costs, the aftermath of the COVID-19 pandemic and changing patient demands.
In response, Medibank has offered $63 million in financial support for private hospitals.
"What we continue to think about is how we support the sustainability of hospitals in a way that doesn't push up premiums," Mr Koczkar said.
"We want the private hospital sector to be strong."
