CEO INSIGHTS – Week Ending 9 June 2017 by NAOS Asset Management

“Courtesy of low interest rates and a shortage of property supply, it doesn’t feel to me as it has in other periods — that we are on the edge on a cliff’’ John McGrath, Founder, McGrath Real Estate

As part of the NAOS investment process, we pay particular attention to the comments made by company CEO’s and business leaders in order to gain a greater understanding of the current investment environment and key trends that may be emerging. Below are quotes from the week which in our view detail some of the most important and prominent industry trends and economic factors impacting their businesses. (VIEW LINK)

Health Insurance

“We are concerned from an industry perspective that we are seeing a decline in younger people asking about private [health] cover and that will have huge ongoing ramifications for the industry as they offset the cost of older Australians” Scott Wilson, CEO, iSelect

“We are working with others in the industry about reducing the price for people under the age of 30 to enter the system. Giving young people an incentive to get in, and stay in, the system would help everyone in terms of stabilising pricing” Richard Bowden, CEO, Bupa

“We have now seen seven consecutive quarters of decline across the industry… the participation rate of the population with private hospital cover is now 46.5 percent” Scott Wilson, CEO, iSelect

“[Consumers] are looking at their health insurance contribution going up at 4.5 per cent and their wages going up at 2.5 per cent. Whatever we do, and whatever the government does to influence policy, has to be around affordability” Richard Bowden, CEO, Bupa

“I genuinely think the sector has to look within at costs and add-ons and the way in which we are competing, because stealing everyone’s market share until you hit the bottom is not really an answer. It’s time to do something now and it’s not just putting up premiums” John Van der Wielen, CEO, HBF

“Private hospitals are profit-making ventures, I have nothing against that, but our challenge across the industry is to be able to ethically and appropriately place pressure on those hospitals to get their profits down to a reasonable level” John Van der Wielen, CEO, HBF 

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