Threat to Medibank from Comparison Sites

The number of policyholders under the Medibank Private brand has shrunk. Only fractionally, but there are less Medibank Private policyholders today than two years ago. All of the growth is coming within Medibank's no frills insurance brand, ahm.

By InvestSMART · 22 Oct 2014

By InvestSMART ·
22 Oct 2014

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Mathias Cormann didn’t like my suggestion that comparison websites present an increasing threat to Medibank Private’s business. The finance minister followed me on the ABC’s The Business last night (the relevant section starts at 3:30) and said comparison sites have been around since he was running a health insurance business more than 10 years ago.

Nothing has changed, apparently. True, I haven’t run a health insurance business. But the numbers presented in Cormann’s Medibank IPO document suggest the world has changed since his own time on the tools.

It is being loudly trumpeted that Medibank is a growing business and that is born out in the policyholder numbers. They grew 1.04% in the 2013 financial year and 1.46% in 2014. More than 1.8 million Australians have a health insurance policy with the company. But table 3.4 on page 43 of the prospectus provides the interesting detail.

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Frequently Asked Questions about this Article…

How do comparison websites pose a threat to Medibank Private?

Comparison websites can pose a threat to Medibank Private by making it easier for consumers to compare health insurance options and potentially switch providers. This increased transparency and competition can challenge Medibank's ability to retain policyholders.

Has the presence of comparison websites affected Medibank's growth?

Despite the presence of comparison websites, Medibank has shown growth in policyholder numbers, with a 1.04% increase in 2013 and a 1.46% increase in 2014. However, the long-term impact of these sites on Medibank's growth remains a topic of discussion.

What was Mathias Cormann's view on the impact of comparison websites on Medibank?

Mathias Cormann, the finance minister, suggested that comparison websites have been around for over a decade and do not pose a new threat to Medibank. He believes that nothing significant has changed in this regard.

Why might some investors be concerned about Medibank's future with the rise of comparison sites?

Investors might be concerned because comparison sites increase competition by allowing consumers to easily compare and switch health insurance providers, potentially affecting Medibank's market share and growth.

What growth figures were highlighted for Medibank in the article?

The article highlighted that Medibank's policyholder numbers grew by 1.04% in the 2013 financial year and by 1.46% in 2014, indicating a positive growth trend despite the competitive landscape.

How many Australians currently have a health insurance policy with Medibank?

More than 1.8 million Australians have a health insurance policy with Medibank, showcasing its significant presence in the health insurance market.

What does the Medibank IPO document suggest about the company's business environment?

The Medibank IPO document suggests that the business environment has evolved since Mathias Cormann's time in the health insurance industry, with new challenges such as comparison websites emerging.

Why is the growth of Medibank's policyholder numbers significant?

The growth in Medibank's policyholder numbers is significant because it demonstrates the company's ability to attract and retain customers in a competitive market, despite potential threats from comparison websites.