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Not-for-profit health funds HCF and HBF considering merger


Both brands hope to compete more effectively while retaining their individual identities.

Not-for-profit health funds HCF and HBF are considering a merger that would give the combined entity an 18% market share, making them Australia's third largest behind Bupa and Medibank Private.

If approved, the companies will combine their operations but retain their individual identities and management structures. The goal is to reduce premiums for members and to make each brand more competitive in the private health insurance market.

“Our combined strength will enable us to grow both brands, pass on greater benefits to our members and compete more effectively in a challenging industry,” HCF CEO Sheena Jack said in a statement.

HCF’s 2018 rate increase of 3.39% was its lowest in 16 years and the lowest of all major funds – against an industry average of 3.95%. Jack credits this to HCF’s members-first approach.

“The not-for-profit business model exists for its members rather than shareholders, and it plays a vital role in our economy – not just in health insurance, but across many industries. Our number one focus will be the same as it has always been: to protect the best interests of our combined membership,” Jack said.

HCF chairman Robert Goaley says it is the member-first approach that makes the merger a logical fit.

“HBF lives by that philosophy too. With our enhanced competitive position, we could offer a superior customer experience by reducing upward pressure on premium increases,” Goaley said in a statement.

HCF is Australia’s largest not-for-profit health fund and HBF is the largest single fund in all of Western Australia.

The counsellors for each organisation are set to vote on the merger in March. If it passes, the merger will need to be approved by the Australian Competition and Consumer Commission (ACCC) and the Australian Prudential Regulation Authority (APRA).

Pending these approvals, the merger could be completed by the middle of 2018.

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