Demographic Outlook for Health Insurance in Australia in the 2010s

AHIA

Demographic Outlook for Health Insurance in Australia in the 2010s

Bernard Salt

10 November 2011

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Disclaimer

These slides are not for commercial use or redistribution. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. KPMG have indicated within this presentation the sources of the information provided. KPMG has not sought to independently verify those sources unless otherwise noted within the presentation. No reliance should be placed on additional oral remarks provided during the presentation, unless these are confirmed in writing by KPMG. KPMG is under no obligation in any circumstance to update this presentation, in either oral or written form, for events occurring after the presentation has been issued in final form. The findings in this presentation have been formed on the above basis. Forecasts are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Forecasts should not be regarded as a representation or warranty by or on behalf of KPMG or any other person that such forecasts will be met. Forecasts constitute judgment and are subject to change without notice, as are statements about market trends, which are based on current market conditions. Neither KPMG nor any member or employee of KPMG undertakes responsibility arising in any way from reliance placed by a third party on this presentation. Any reliance placed is that party’s sole responsibility. The presentation (and the accompanying slide pack) is provided solely for the benefit of the conference attendees and is not to be copied, quoted or referred to in whole or in part without KPMG’s prior written consent. KPMG accepts no responsibility to anyone other than the conference attendees for the information contained in this presentation.


Australians are on the move … to the coast

Losers Winners

Areas of high population growth (>2% pa) and loss (<-1% pa) between 1986 and 2010

Gladstone

Hervey Bay Sunshine Coast Gold Coast

Coffs Harbour Port Macquarie

Port Stephens

Narooma

Surf Coast Sorell

Victor Harbor

Augusta- Margaret River

Broome

Mackay

Cairns-Port Douglas

Bundaberg

Byron Bay

Denmark

Source: Based on Australian Bureau of Statistics data; KPMG

TOWNSVILLE

DARWIN

PERTH

FIFO WEST FIFO EAST

FIFO CENTRAL


Growing Extra 2010 1. India 245,000 341,000 2. China 232,000 380,000 3. New Zealand 175,000 544,000 4. South Africa 75,000 156,000 5. Philippines 67,000 177,000

Contracting Loss 2010 1. Italy -26,000 216,000 2. Greece -7,000 127,000 3. Poland -7,000 58,000 4. Malta -4,000 49,000 5. Netherlands -3,000 89,000

• Most growth and loss by place of birth in Australia, 2000 - 2010

Australia is shifting from Mediterranean to Asian influences



Other tribes on the rise …

• Facebook …

• PUMCINS ….

• NETTELs …

• KIPPERS …

• LOMBARDs …


Anticipate demand around changes in the Australian demographic profile

• Net change in Australian population by 5-year age group over 10 years to 2010 and 10 years to 2020


2000-10 2010-20

Mature adults • Top hospital cover • Knee replacements • Weight loss Young adults

• Singles/couples health cover • Obstetrics • Sports injuries

Retirees • Retirees health cover • Heart conditions • Chronic disease

Kids & teenagers • Family health cover • Child healthcare

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

0 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59 60 - 64 65 - 69 70 - 74 75 - 79 80+

2000-2010: 3.2 million or 19m – 22m 2010-2020: 3.3 million or 22m – 25m


0 90 10 20 30 40 50 60 70 80

Increasing life expectancy is creating new stages of the lifecycle and new markets for health insurance

Child Adolescence Lifestyle Old Retired 2011 82

Adult

Child Teen Old Adult 1971 71

Child Adult Old 1931 63

• Change in life expectancy over 80 years in Australia



Who is … what is … Generation Y?

Born 1976-1991

Raised in prosperity

Single kids

Unfazed

by

authority

Culture of volunteering

Disappointed

generation


40 20 60 80 Development Peak Income Lifestyle Departure Dependence

Health insurance peaks in the 3rd quarter of life

• Average annual income per income-earner by single year in 2006

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95



Boomer and pre-boomer households spend most on medical insurance in Australia

• Average weekly spend on health insurances in Australia, 2009 - 2010

$0

$5

$10

$15

$20

$25

$30

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

15-1

9

80+

Average w

eekly household expenditure (A

mbulance)

Ave

rage

wee

kly

hous

ehol

d ex

pend

iture

(Hos

pita

l, m

edic

al, d

enta

l & S

ickn

ess,

per

sona

l acc

iden

t)

Hospital, medical & dental Sickness & personal accident Ambulance (separate insurance)

20-2

1

22-2

3

24-2

5

26-2

7

28-2

9

30-3

1

32-3

3

34-3

5

36-3

7

38-3

9

40-4

1

42-4

3

44-4

5

46-4

7

48-4

9

50-5

1

52-5

3

54-5

5

56-5

7

58-5

9

60-6

1

62-6

3

64-6

5

66-6

7

68-6

9

70-7

1

72-7

3

74-7

5

76-7

7

78-7

9

Source: Based on Australian Bureau of Statistics Household Expenditure Survey data; KPMG


Australia is moving from baby boom to baby bust … we need either more tax or more tax payers

• Net growth in working age population (15-64) over 100 years in Australia based on 2008 outlook with different annual migration assumptions

1950 2050 2000


- 100,000

- 50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 2041 2044 2047 2050 2053 2056

ERP Proj - 0k NOM Proj - 70k NOM Proj - 180k NOM Dwelling Commencements (public and private)


There has been a structural shift in the Australian economy … less low-skilled work … more highly-skilled work

• Net change in total jobs in Australia over two successive three-year periods, August 2005 – August 2011


2005-2008 2008-2011

3 years Aug 2011 – up 501k (10.8m – 11.3m) Health

Less skills

Professionals

More skills

- 110,000

- 90,000

- 70,000

- 50,000

- 30,000

- 10,000

10,000

30,000

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

210,000

Manufacturing

Transport, Retail, Other, Wholesale

Construction, Education

3 years Aug 2008 – up 853k (10.0m – 10.8m)


Baby boomers will re-engineer retirement in the coming decade … beware the rise of the grumpy retiree!

• Net growth in population (65+) over 100 years in Australia

130,000

1950 2050 2000

Pop

ulat

ion

grow

th

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

1950 1954 1958 1962 196 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 2034 2038 2042 2046 2050



Australia will benefit from rise of “The Dubai Effect”

New York Shanghai

Singapore

London

Hong Kong

Moscow

Dubai

Sydney


The GFC has prompted the rise of the ‘moral consumer’

Then 1997 - 2008

• Era of high consumerism … and of ‘corporate high-flyers’

• ‘Live for the moment’ … pay in the future

• Plasma TVs, McMansions, Manolo Blahnik shoes

• Easy credit … rising house prices

• Celebration of the individual … confidence in the future and in ourselves

Recession

Consumers driven by “Aspirationalism”

• Rise of the moral consumer … the new Wowserism … seeks value on internet

• Anti-drinking, smoking, speeding, gambling, junk-food (obesity) … concern about corporate excess

• Rise of Green, ethical & traditional values … celebrities

• Fear drives a retreat to the security of the herd, the tribe, the family, familiar brands?

Now 2009+

Consumers driven by a “New Morality”


• Percentage difference in the number of men and women in Australia and New Zealand by individual year in 2006

-15%

-10%

-5%

0%

5%

10%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74

Australia New Zealand

35

Man Drought

Boy Town

Widow World

27

35

58 65 Man Mountain M

ore

men

M

ore

wom

en

Source: Based on Australian Bureau of Statistics data; Statistics New Zealand data; KPMG

The Great Australasian Man Drought … Stage 3A restrictions now apply

The Great Australasian Man Drought … Stage 3A restrictions now apply


Contact

Bernard Salt KPMG Australia +61 3 9288 5047 [email protected] www.bernardsalt.com.au twitter.com/bernardsalt linkedin.com/in/bernardsalt facebook.com/BernardSaltDemographer

Demographic Outlook for Health Insurance in Australia in the 2010s

Health & Medicine

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