Medibank, Nib shares jump after announcing premium hikes for 2026

Shares in Medibank and Nib have jumped after both insurers announced premium hikes of more than 5 per cent for 2026.

More than 15 million Australians are facing added pain to already-crunched household budgets after Federal Health Minister Mark Butler on Tuesday approved an above-inflation increase to private health insurance premiums.

In a note to clients, UBS analyst Kieren Chidgey said the average hike of 4.41 per cent for 2026 was slightly shy of its 4.7 per cent estimate required for private health insurers to sustain profit margins.

As a result, he expects “moderately lower industry margins ahead”.

But Mr Chidgey reckons Australia’s two listed insurers — Medibank, also the nation’s biggest, and Nib — are better insulated than not-for-profit funds, which includes WA’s dominant private health insurer HBF.

Mr Chidgey said Medibank’s 5.1 per cent increase — equating to a $2.14 rise a week for a single policy or $4.46 a week for a family policy — was well-ahead of UBS’ expectation for a 4.25 per cent hike.

“This suggest an ability to sustain net margins at about 9 per cent even if paid versus incurred claims buffers run out and inflation reverts towards industry levels,” he said.

Likewise for Nib, its 5.47 per cent price hike should increase its likelihood of sustaining margins for it core Australian residents health insurance business within its 6 to 7 per cent target range moving forward.

Shares in Medibank jumped 6.6 per cent to $4.82 and Nib up 5.6 per cent to $6.74 in afternoon trade on Wednesday.

It comes as health costs have become a significant contributor to Australia’s inflation woes.

And while latest figures from the Australian Bureau of Statistics showed household spending on health declined 1.3 per cent in December, partly due to higher bulk-billing rates reducing out-of-pocket costs for household, it followed several months of growth.

On Tuesday, Mr Butler, who has to approve premium rates, said the 2026 increase reflected the rising costs of providing medical and hospital services, which rose 5 per cent last financial year.

“The Government understands the pressure health insurance premium changes put on Australians and decisions about private health insurance premiums must put consumers first,” he said.

“This year’s decision reinforces that premium increases must be backed by clear evidence and contribute to system-wide improvements, not just insurer balance sheets.

“I expect private health insurers and hospitals to work hard to bring down costs and keep future price increases to a minimum.”

Half of the Australian population have some form of private health insurance, with 45 per cent holding private hospital cover.

Private health insurers are under scrutiny amid accusations from the powerful Australian Medical Association that they increasingly fail to deliver value for money, with Mr Butler under pressure to make insurers return at least 90 per cent of premiums to consumers by way of treatment benefits.

At the same time, private hospital operators have also accused insurers of not passing on enough money to cover rising cost of care. Insurers claim they have been paying out a record amount.