Profit has soared at Australia's biggest private health insurer Medibank Private, thanks to premium rises and a crackdown on improper health insurance claims.
Medibank, which has around 3.9 million members, booked a 58 per jump in net profit to $227.6 million for the six months ended December 31, thanks to a government approved premium rate rise of 6.59 per cent.
The result was also boosted by a $23.2 million one-off tax benefit from the Australian Tax Office.
That compares with a net profit of $143.8 million in the same period a year earlier.
Medibank's health insurance business booked a 59 per cent jump in operating profit to $271.7 million in the fist-half of fiscal 2016, driven by cost cutting and higher revenue.
Health insurance premium revenue rose 4.6 per cent to $3.08 billion.
Medibank's crackdown on improper health insurance claims led to a sharp slowdown in the rate of growth. In the first half ended December 31, claims rose by 0.6 per to a record $2.6 billion.
Traditionally, claims are up between five to six per cent across the health insurance industry, managing director George Savvides said Friday.
Medibank, which was privatised in November 2014, forecast annual operating profit of more than $470 million and premium revenue growth of between 4.5 per cent and five per cent.
The health insurer has lodged a trimmed insurance premium rate increase request with the federal government, Mr Savvides said.
"The rate application that we put into the government late last year was already lower than the prior year, and our resubmission that we submitted just a few weeks back was a bit lower again," he said.
Medibank announced on January 22 that it would lodge a revised submission with the government as the company delivered a strong earnings update.
Medibank's announcement came before the Health Minister Sussan Ley wrote to health funds asking them to either lower their requested premium increase or justify their initial request.
Ms Ley is overseeing a review of the $19 billion private health insurance sector.
Traditionally, the government announces its premium rate decision on the last day in February, but in previous years it has come in the first week of March, Mr Savvides said.
He said the search for his replacement is "well advanced", and it shouldn't be too much longer before an announcement.
MEDIBANK PRIVATE's PROFIT SOARS
*Net profit jumped 58pct at $227.6m
*Revenue rose 3.4pct to $3.38b
*Interim dividend of five cents a share vs nil
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