Annual Report 2011 - GMHBA Health Insurance

Annual Report 2011

GMHBA Limited Annual Report 2011 GMHBA Limited Annual Report 2011 

GMHBA Mission 

Supporting the health of our communities for generations. 

Our Fundamental Belief 

Consistent with a not-for-profit ethos we believe our primary 

obligation is to the wellbeing of our members and their communities. 

Only if we do well by them is our business sustainable. 

Content 

GMHBA PERFORMANCE SNAPSHOT ____ 4 

2011 HIGHLIGHTS ______________________ 5 

CHAIRMAN’S REPORT __________________ 6 

CHIEF EXECUTIVE’S REPORT ____________ 7 

BOARD OF DIRECTORS _________________ 8 - 9 

EXECUTIVE MANAGEMENT TEAM ______ 10 - 11 

STRATEGIC INTENTS ___________________ 12 - 16 

FINANCIAL REPORT ____________________ 17 - 49


4 Strong financial position 

2011 Highlights 

5 

More for members – annual benefits paid $217m 

For every dollar GMHBA received in premiums, 87 cents was paid 

back to members in benefits. 

Contribution income ($’000) 

14.2% increase 

2006 

2007 

2008 

2009 

2010 

2011 

Benefits Paid ($’000) 

10.7% increase 

2006 

2007 

2008 

2009 

2010 


6,724 

new members 

708 

newborns 

1.046 

million ancillary 

claims paid 

520 

contracted hospitals 

$13.4 

million surplus 

210,101 

Australians covered 

$134,299 

$148,709 

$164,530 

$191,355 

$216,867 

$247,747 

$116,692 

$128,685 

$144,923 

$168,220 

$195,749 

$216,693 

200,852 

phone calls 

to GMHBA 

$20.944 

million increase 

in benefits paid 

55,782 

hospital admissions 

Memberships 

7.4% increase 

2006 

70,282 

2007 

73,300 

2008 

77,655 

2009 

86,093 

2010 

91,468 


98,192 

Total Assets ($’000) 

8.8% increase 

2006 

$111,107 

2007 

$133,211 

2008 

$139,800 

2009 

$152,693 

2010 

$164,752 


$179,193 

Membership growth: 

GMHBA exceeds 

industry average 

2.3% 

2006 

2.8% 

4.3% 

2007 

3.8% 

Membership Growth: 

National annual growth 

5.9% 

2008 

4.9% 

10.9% 

2009 

3.1% 

2010 

How GMHBA Compares 

6.2% 

3.0% 

7.4% 


3.4% 

Membership benefits: 

GMHBA returns more benefits to 

members than the industry average 

87% 

85% 

87% 

84% 

88% 

85% 

2006 

2007 

2008 

2009 

Member Benefits: 

Based on percentage of contributions 

88% 

87% 

90% 

2010 

86% 


87% 

GMHBA 

Industry 


Industry


6 Chairman’s Report 

Chief Executive’s Report 

7 

It gives me great pleasure to 

present this report for the 2011 

financial year. 

GMHBA Limited had an excellent 

year, achieving a surplus of $13.4m, 

an increase of 129% on the prior 

year and as a result has achieved 

a new milestone in net assets 

which now sits at $110m. 

Total contribution revenue for the 

year was $248m up 14.2% year on 

year. The most pleasing part of 

this result is that the business as 

measured by underwriting surplus 

performed at its best level in the 

organisation’s history while still 

achieving outstanding membership 

growth of 7.4%. 

It should also be noted that this 

result was reached at a time when 

the organisation was forced to fight 

an unwelcome and aggressive 

takeover bid, and while GMHBA 

was also consolidating the new 

Frank Health Insurance brand and 

launching a new sports and fitness 

brand – FIT Health Insurance. 

During this coming year GMHBA’s 

contribution revenue is expected to 

exceed a quarter of a billion dollars. 

With its strong capital base and its 

position as Australia’s eighth largest 

health insurer, fund members 

can be assured that their health 

insurance is securely placed with 

a well managed and financially 

strong health fund. 

The strength and appeal of our 

fund to new members is clearly 

demonstrated by the continued 

above industry membership growth 

rates achieved, while our current 

members continue to give GMHBA 

very high satisfaction ratings in all 

of our member surveys. A prime 

example was the overwhelming 

member support shown during 

the hostile takeover challenge 

that occurred earlier this year. The 

board was clearly told by members 

that we were to continue to do 

what GMHBA has done well for 

over 75 years; that is to continue 

to provide friendly and efficient 

service, and value for money health 

insurance. 

This year’s financial outcome has 

been achieved in a challenging 

economic period within our main 

market of Victoria and in a period of 

increased general competitiveness 

in the industry. 

We are proud that GMHBA can 

support those Australian families 

who see the value in protecting 

their future health needs, by using 

the private health insurance system 

and so helping the community 

generally by taking the strain off 

our good, but pressured public 

health system. I would also like 

to pass on my thanks to all those 

health professionals who have done 

a magnificent job in helping our 

members in their times of need. 

This year’s positive result has not 

happened by chance. GMHBA has 

an experienced board that has 

provided excellent leadership to the 

organisation. It would be remiss of 

me in my first report as chairman, 

not to mention that the capability 

the board has shown this year was 

in no small measure due to the work 

of Mr Michael Dowling who as my 

immediate predecessor had worked 

hard for many years to ensure that 

the organisation was in a strong 

position on all measures. 

The board welcomed a new director 

this year in Mr Brian Benger, who 

has extensive insurance and 

investment experience and who 

has further strengthened an already 

strong board. I would like to thank 

all the GMHBA directors for the 

support they have given me in 

the challenging early days of my 

chairmanship and to also thank 

them for their hard work and service 

in the other challenges we have 

faced this year. The performance of 

the board has been matched by the 

commitment and performance of 

the management team led by Chief 

Executive Mr Mark Valena who have 

performed at an exemplary level 

throughout this exciting year. 

GMHBA’s aim of being one of the 

most respected health funds while 

maintaining great service and value 

for members, was clearly achieved 

this year and I would especially 

like to pass on my thanks to our 

dedicated staff who have done a 

magnificent job in ensuring we 

continue to meet this aim. 

Economic conditions have been 

challenging for government, 

businesses, investors and 

individuals. Consumer confidence 

is low. People appear uncertain 

about their future as indicated by 

the high levels of personal saving 

and reduction in credit card debt. 

Yet businesses that focus on 

providing their customers the 

products they need, at prices 

they can afford and with quality 

personalised service, can still 

do well. 

GMHBA is one such business. 

We are proud of what we have 

achieved this year on our 

members’ behalf. 

At GMHBA we believe that our 

primary obligation is to the 

wellbeing of our members and their 

communities. We deliver on this 

obligation through our enduring 

track record of providing affordable 

and useful health insurance. 

Without our products we know 

that many of our members would 

either not have seen themselves 

as able to afford health insurance 

nor would they have been able to 

access timely and quality private 

medical care. 

We also demonstrate this member 

focus every day. In the 2011 financial 

year we: 

• Kept our premiums competitive 

with an average premium rate 

increase in line with the industry 

average; 

• Delivered value-for-money 

returns to members through 

benefit payments as evidenced 

by achieving more ‘best buys’ 

than all major competitors from 

Australia’s leading consumer 

magazine (three years out of 

four); 

• Are again a finalist in the 

BRW/ANZ Private Enterprise 

Customer Service awards; and 

• Began providing health 

information education forums 

in our local community. 

We know that our members 

recognise and value our focus. 

In a recent survey in our home 

market of Geelong, GMHBA was 

most strongly differentiated (from 

our competitors) as being not-forprofit, 

caring, contributing to the 

local community and focusing on 

member interests. 

In line with this member focus 

is good financial management. 

As overviewed in the Chairman’s 

Report, we have had an excellent 

year with strong growth, a good 

but not excessive surplus from 

our health insurance business and 

stable investment results. 

Good financial management over 

many years has delivered the strong 

capital position that we now enjoy. 

This capital provides the financial 

security that gives members 

confidence we will be here in the 

future, and allows us to invest in 

new initiatives that enhance value 

to our membership. 

Currently we are planning to 

greatly increase the level of support 

we provide to members around 

management of chronic conditions, 

to help them stay well. We look 

forward to the rollout of these 

programs and further contributing 

to the well being of our members. 

Lastly, I thank our staff, directors 

and all our business partners for the 

continuing efforts that collectively 

ensure we remain a ‘very good 

health insurer’. 

Kenneth E. Jarvis 

Chairman 

Mark Valena 

Chief Executive


04 | Professor John C. Catford 05 | Russell H. Elliott 

07 | Brian G. Benger 

8 Board of Directors 

9 

MA, MSc, MB, BChir, DM, DCH, B.Sc., M. Ed., MAICD. 

B.Ec (Hons), AdvDip Fin Services 

01 | Kenneth E. Jarvis 

OAM, KSJ, B App. Sc (Hons), 

Dip OR. 

Director since 2004 

Chairman 

Chairman Nomination & 

Remuneration Committee 

Member Audit & Compliance 

Committee 

Member Strategy Committee 

Executive Chairman – Aerolite 

Quarries Pty Ltd 

Executive Chairman – Jakape Pty Ltd 

Chairman – Victorian Regional 

Channels Authority 

Director – Gordon TAFE Ltd 

Director – Aviation Australia 

Development Ltd 

02 | James E. Walsh 

B.Com, MBA, FCA, MAICD. 


Deputy Chairman 

Chairman Strategy Committee 

(since July 2011) 

Member Audit & Compliance 

Committee 

Member Nomination & 


(until July 2011) 

Chartered Accountant 

Director – Godfrey Hirst Australia 

Pty Ltd 

President – The Geelong Chamber 

of Commerce 

03 | Sue Renkin 

RN, MBA, MAICD, FCDA. 


Chair Health Services Committee 

Member Nomination & 


Member Investment Committee 


Chief Executive – Open Family 

Australia (until October 2010) 

Managing Director – intuitively 

focussed p/l 

Chairman – Monash Centre for 

Green Chemicals Future 

Chairman – Clayton Bio Medical 

Imaging Laboratories 

Chairman – Southern Metropolitan 

Cemeteries Trust 

Director – General Practice (VIC) 

Director – Northern Health 

FFPH, FRCP, FAFPHM, FIPAA, FAICD. 


Member Health Services Committee 

Member Nomination and 



Dean of the Faculty of Health, 

Medicine, Nursing and Behavioural 

Sciences and Professor of Health 

Development, Deakin University 

Chair – Postgraduate Medical 

Council of Victoria 

Editor-in-Chief, Journal Health 

Promotion International Oxford 

University Press 

Adjunct Professor in the Faculty 

of Medicine, Nursing and Health 

Sciences at Monash University 

Chair – Youth Substance Abuse 

Service 

Chair – Kinect Australia 

(incorporating VicFit in Victoria) 

Director – Diabetes Australia 

(Victoria) 

Director – Research Australia 

Governor – Windermere Foundation 

Governor – Epworth Foundation 


Chairman Investment Committee 



Associate Vice President 

(Administration) – Monash 

University 

Executive Director – Russell Elliott 

and Associates Pty Ltd 

06 | Gerald Miller 

BA, LLB. GAICD. 


Chair Audit & Compliance 

Committee 


(until July 2011) 


(Sep 2010 – July 2011) 



Lawyer 

Director – The Geelong College Ltd 

Consultant – Browne & Co Solicitors 

and Consultants 

(Superannuation) FAICD 

Appointed Director February 2011 



Chairman – FABAL Group 

Member – Future Fund Advisory 

Board, The Oaktree Foundation 

Director – The Victorian Managed 

Insurance Authority 

Director – Mercer Investment 

Nominees Ltd. 

Michael J. Dowling 

KSJ, B.Ec., FCA, SFCDA, Dip CD. 

Retired September 2010 

Chairman Nomination & 




Director – Dowling Corporate 

Consulting Pty Ltd 

Heather L. Wellington 

MBBS, B. Med. Sci., 

BHA, FRACMA, LLB, FAICD. 

Resigned July 2010 


Lawyer 

Medical Practitioner 

Director – HPA Consulting Pty Ltd 

Chairman – IPG Ltd 

Consultant – DLA Phillips Fox 

Lawyers 

01 02 03 04 05 06 

07


10 GMHBA Executive Team 

11 

01 | Mark Valena – 

Chief Executive 

Mark is an experienced Business 

Executive. He came to the helm 

at GMHBA in early 2008 following 

seven years as the CEO of Medical 

Defence Association Victoria. 

MDAV was Victoria’s largest medical 

professional indemnity insurer 

(with an 18% national market share) 

and as a not-forprofit organisation, 

in a highly regulated insurance 

market operating in the health 

sector, provided a sound experience 

base for his current role at GMHBA. 

Mark has significant experience in 

the negotiation and implementation 

of mergers and business 

transitions at MDAV, NRMA and 

Fortis Insurance. Through these 

transitions Mark was able to create 

an environment of goodwill and 

navigate through many complex 

agendas leading to retention of 

members and employees. Mark is 

an Australian Chartered Accountant 

who has a Bachelor of Business and 

a Graduate Certificate in Innovation 

& Service Management. 

02 | Michael Carroll – 

Company Secretary 

& Compliance 

Michael is a Business Executive 

with over 26 years experience. 

He is responsible for the Company 

Secretariat, with Compliance 

as another major responsibility. 

Michael is accredited with a 

Bachelor of Business (Accounting) 

from Swinburne University, he is 

a Certified Practicing Accountant, 

has completed his MBA at Deakin 

University in 2004 and in 2007 

completed a Graduate Diploma in 

Applied Corporate Governance with 

Chartered Secretaries Australia. 

03 | Jacqueline Armitage – 

Marketing & 

Member Services 

Jacqueline is a professional 

Sales and Service Executive 

with over 30 years Australian 

and Asian experience and a 

proven track record in managing 

multi-site operations for ‘blue 

chip’ organisations; with 5 years 

experience at GMHBA. Jacqueline’s 

success in her field is attributed 

to her ability to develop both 

strategic and tactical solutions 

to achieve sales targets as well 

as improve quality, productivity 

and customer satisfaction. This 

ensures customers’ expectations 

are consistently met and often 

exceeded. 

04 | James Arnott – 

FIT Health Insurance 

General Manager 

James is a Business Executive with 

over 20 years experience. James is 

responsible for providing strategic 

and operational leadership to the 

FIT Team ensuring successful 

operations across all aspects of the 

FIT business unit. Prior to heading 

up FIT Health Insurance, James was 

responsible for a range of GMHBA 

services including Health Services, 

Claims Audit, Product Development 

and Marketing. James previously 

worked with Caulfield General 

Medical Centre and The Alfred 

Hospital for over 13 years where 

he was responsible for a diverse 

group of services. James has a 

Diploma of Applied Science from 

Lincoln Institute of Health Sciences, 

a Bachelor of Prosthetics and 

Orthotics from LaTrobe University, 

and an MBA from the University of 

NSW. James is also a member of 

the Executive Committee of the G21 

Health and Wellbeing Pillar. 

05 | Tim Boyd – 

Human Resources 

Tim is a Human Resource 

practitioner with over 16 years 

experience in HR generalist 

roles and has specialist skills in 

Learning and Development and 

Organisational Development 

functions. Tim has had a long career 

in Automotive Development with a 

large multi national manufacturer in 

roles ranging from HR consultancy, 

Learning and Organisational 

Development and international 

experience in the Asia Pacific 

region. Tim’s experience in 

Asia Pacific has developed an 

ability to understand organisational 

cultures and build relationships 

based on trust and respect. Tim 

currently manages the Human 

Resources team at GMHBA 

providing a comprehensive range of 

HR services to the organisation. 

06 | Tim Gove – 

Finance 

Tim is responsible for leading 

GMHBA’s Finance function. Having 

recently joined GMHBA, Tim 

joins us with both a professional 

services and corporate experience, 

bringing to our team, a strong 

financial and analytical focus. 

Tim is an experienced finance 

professional and has over 20 years 

experience in financial services, 

working in Melbourne, Sydney 

and London. Tim has significant 

experience working with complex 

financial institutions, focusing on 

improving financial and operational 

performance and governance in 

highly regulated environments. He 

holds a Bachelor of Commerce and 

is a Chartered Accountant. 

01 02 03 04 05 06


12 Financially Strong 

Community Connected 

13 

To provide value-for-money products and services to our members 

To develop mutually beneficial relationships with communities 

GMHBA has performed well and 

continued to build and maintain a 

sustainable business over the last 

financial year. 

Growth 

GMHBA again enjoyed strong 

growth in new members above 

the industry average as one of the 

fastest growing health funds in 

Australia. In the 2011 financial year, 

the fund’s membership increased 

by 7.4% compared to the industry 

average of 3.4%. 

This positive outcome is a result 

of strong customer retention, 

advocacy and varied distribution 

channels. This is supported by 

GMHBA endeavouring to better 

understand our members and 

match the right people to the 

right products. 

Managing benefit payments 

The fund has also enjoyed a 

favourable year in terms of our 

overall experience with claiming 

outcomes. 

Our team of claims analysts 

closely monitor payments made 

to hospitals, medical and ancillary 

providers to ensure that only correct 

benefits are paid. During the 2011 

financial year, more than $2m 

of members’ money was saved. 

This in turn has a direct impact on 

GMHBA’s ability to keep premiums 

affordable. 

Operating surplus 

This year’s surplus of $13.4m 

was achieved through a whole 

of business approach, primarily 

attributed to new sales growth, 

favourable claims experience, 

closely managed resources and 

prudent investment management. 

Investments & capital 

management 

We have continued with a 

conservative investment strategy 

with our investment income of 

$8.4m representing an average 

return of 6.16% on funds invested. 

Our investment strategy supports 

our capital needs in regard 

to prudential and regulatory 

requirements, adverse risk 

situations and future strategic 

initiatives. 

GMHBA is committed to sustainable 

investment in the health and 

wellbeing of the community. 

Employee contribution 

Key to our community strategy is 

employee involvement through 

volunteering and salary donations. 

GMHBA employees provide tangible 

assistance to the community 

through volunteering programs that 

help empower and connect people. 

In 2010/11, GMHBA employees 

contributed more than 100 volunteer 

hours to community organisations 

and projects, via a community 

partnership with BacLinks. Our staff 

also provided skilled expertise to 

organisations such as Give Where 

You Live and the Geelong Chamber 

of Commerce. 

GMHBA’s Workplace Giving 

program experienced a 22% 

increase in the 2011 financial 

year. This increase is attributed 

to GMHBA employees working as 

ambassadors for the Workplace 

Giving program. 

Member wellness 

This year, GMHBA introduced free 

member information sessions on a 

variety of health related topics. The 

aim of these sessions is to improve 

community health outcomes 

through knowledge and education. 

This initiative will be further 

developed in the coming year. 

GMHBA’s promotion of a bowel 

cancer screening program to 

members, has resulted in over 

4,800 members being tested, 

an additional 1,400 members in 

the last 12 months. This testing 

resulted in 6% of members tested 

receiving confirmation that further 

investigation was warranted. 

Also introduced in 2010/11 were 

free in-branch health checks open 

to members and the public by an 

experienced exercise physiologist 

and nutritionist, specifically 

promoting men’s health. 

Community partners 

Over the years, GMHBA has 

developed a number of strong 

relationships with community 

partners. 

In 2010/11, GMHBA made a 

significant contribution to Geelong 

not-for-profit organisation, Give 

Where You Live. GMHBA’s CEO 

has been the ambassador for the 

organisation’s 2011 fundraising 

appeal. GMHBA also provided 

funding to Give Where You Live 

for their marketing and promotional 

materials. This enabled Give 

Where you Live to maximise 

the distribution of funds raised to 

over 70 community organisations 

across the Geelong region. 

For the third consecutive year, 

GMHBA employees participated 

in the annual charity cycling 

event through Regional Victoria, 

the Murray to Moyne. Through 

staff fundraising and donations 

of GMHBA’s Corporate Partners, 

GMHBA was able to raise $30,000, 

a threefold increase on previous 

fundraising efforts. As a result, 

GMHBA was able to donate 

$30,000 to the Ballarat Cancer 

Research Centre. 

Highlights: 

Highlights: 

• Strong membership growth of 7.4%. 

• Net asset growth of 13%. 

• Successful transition to new bank. 

• Exceeding growth and profitability targets for Frank 

Health Insurance in its second full year of operation. 

• Claims analysts recovered $2.06m for the year. 

• GMHBA employees contributed more than 100 volunteer hours 

to community organisations and projects. 

• Donations were provided to 12 charities as a result of staff 

casual dress days. 

• GMHBA employees increased their charity salary contributions 

by 22%. 

• $30,000 raised by GMHBA staff participating in the annual 

Murray to Moyne charity cycling event. 

• The introduction of member health information sessions. 

• More than 4,800 members have participated in a Bowel Cancer 

screening program.


14 Trusted Partner 

Success through Innovation 

15 

A better way of service that is noticeably different. 

To innovate for differentiation and growth 

A major feature of GMHBA’s 

strategy is to become a trusted 

partner within the communities 

in which we operate. 

Our intention is to provide the 

best service possible and to offer 

members more in the role we play 

in improving core health through 

wellness programs and initiatives. 

Transparency 

GMHBA staff work hard to maintain 

transparency and trust in all that we 

do and we are able to achieve this 

in three key areas by: 

• simplifying processes 

• keeping members informed 

• giving members choices that 

are in the best interest of 

the member. 

Member satisfaction 

Throughout the year, GMHBA 

member satisfaction is researched 

and monitored through surveys. 

On a scale where ‘7’ is the 

maximum, GMHBA averages 

between 6.3 and 6.6 which 

continues to demonstrate that 

member advocacy is high. Positive 

word of mouth from members is 

a key driver of GMHBA’s ongoing 

success, an element which we are 

proud to report. 

Employee satisfaction 

Our level of service begins with 

our employees and it is our belief 

that highly satisfied members are 

only possible when employees are 

committed to the company. 

In 2010, GMHBA was a finalist in the 

2010 BRW/ANZ Awards recognising 

excellence in customer service. We 

believe it is only possible to receive 

recognition such as this when 

employees are dedicated to the 

cause. 

GMHBA continues to invest in 

its people to ensure that overall 

employee satisfaction is maintained. 

GMHBA is continuously seeking 

new and innovative ways to create 

and capture value for members 

in order to remain competitive. 

FIT Health Insurance 

Designed for active Australians 

and those who want access to 

increased benefits and specialised 

services, FIT Health Insurance 

was successfully launched in 

November 2010. 

FIT Health Insurance has been 

developed in conjunction with 

the help of some of Australia’s 

most respected sports medical 

associations and leading sporting 

and fitness bodies including the 

AFL, Netball Australia, Kinect 

Australia and the AFL Medical 

Officers Association. 

FIT’s objective is to give members 

more for keeping fit, playing sport 

and staying active by offering a 

unique health insurance product 

and service. 

Frank Health Insurance 

Since inception in October 2009, 

Frank Health Insurance has 

continued to enjoy strong growth. 

In the past year, we have improved 

Frank’s products and launched a TV 

advertising campaign with industry 

first promotional offers designed to 

stand out from the pack. 

Frank continues to simplify the 

health insurance message and 

that’s why it’s growing . .. fast. 

RACT Health Insurance 

In June 2011, GMHBA launched a 

new product range in partnership 

with RACT Limited exclusively 

available to RACT members in 

Tasmania. The tailored new 

offering enables GMHBA to further 

extend our reach with a recognised 

insurance provider in a new 

market. 

Online access 

In 2010 GMHBA introduced a new 

quote tool enabling prospective 

members to mix and match covers 

quickly and easily in order to get a 

comprehensive quote and join 

online. A new online joining 

process and member area were 

also implemented across all brands 

to provide new and existing 

members with a better online 

experience. 

External recognition 

Highlights: 

• GMHBA voted the most best-buys of any health fund by 

leading Australian consumer magazine in 2010, 2008 & 2007. 

• Canstar Cannex awarded GMHBA Best Value for a number 

of products in Victoria, Queensland and Western Australia. 

• Finalist in 2010 BRW/ANZ Awards recognising excellence in 

customer service. 

• Introduction of FIT Health Insurance. 

• Launch of RACT Health Insurance. 

• New GMHBA Corporate product range. 

• Significant growth in Frank Health Insurance 

surpassing targeted sales. 

• Improved web facilities.

GMHBA Limited Annual Report 2011 

GMHBA Limited 

ABN 98 004 417 092 

16 Enabling Capability 

To align capability so as to effectively execute strategy 

Enabling the capability of our 

employees, systems and processes 

is critical for us to be successful in 

future endeavours. 

A number of key projects have 

been accomplished over the last 

12 months in order to better equip 

employees with a range of 

specialised skills and capabilities. 

Head office consolidation 

The last financial year saw the 

unveiling of GMHBA’s new head 

office in the heart of Geelong’s 

CBD. The project brought over 

100 employees to one central 

location and ended the need to 

lease separate external office 

space for administration. 

Employee communication 

forum 

A quarterly employee 

communication forum where the 

Chief Executive provides an update 

on the strategy and key issues 

has proved key for good internal 

communication. These forums are 

designed to encourage employees 

at all levels to share ideas and 

discuss a range of different issues. 

The forums are essential to allow 

open communication of the 

strategy across the organisation 

allowing all employees a chance 

to talk to the Chief Executive in 

an informal setting. 

Employee survey 

Throughout 2010, we have made 

significant progress to align our 

culture in order to be able to deliver 

our strategy. The results from 

our most recent Organisational 

Alignment Survey conducted by 

an external survey organisation 

showed great improvement 

in employment alignment, 

engagement and commitment 

to GMHBA’s mission, vision and 

strategy. GMHBA has seen an 

average 78% improvement in scores 

on the three key areas of Clarity, 

Consistency and Commitment 

compared to the previous survey. 

Values & Behaviours 

Our organisation and employees are 

guided by six values and behaviours 

we believe are instrumental to help 

guide us in effectively executing our 

strategy and provide a service that 

is noticeably different. 

GMHBA Values & Behaviours 

Trust – Build credibility through 

actions and demonstrate 

confidence in others’ intentions 

and competencies. 

Contribute – Collaborate and 

get involved. Make a difference. 

Enjoy – Enjoy work. 

Take pride in success. 

Succeed – Be resourceful, 

adaptable and achieve quality 

results. 

Improve – Be curious and 

look for innovation. Have the 

courage to try something new. 

Serve – Aim to make every 

customer experience 

memorable. Make every 

effort to deliver excellence. 

Highlights: 

• Newly opened head office. 

• An average 78% improvement in employee satisfaction scores on 

three key areas of Clarity, Consistency and Commitment. 

Financial Report 2011 

For the year ended 30 June 2011

GMHBA Limited Financial Report 2011 GMHBA Limited Financial Report 2011 

Contents 

Members of the Board of Directors 

Page 

The directors of the Company at any time during or since the end of the financial year were: 

Members of the Board of Directors 19 

Directors’ report 20 – 21 

Lead auditor’s independence declaration 22 

Corporate governance statement for the year ended 30 June 2011 

23 – 24 

Statement of comprehensive income for the year ended 30 June 2011 

25 

Statement of financial position as at 30 June 2011 

26 

Statement of changes in equity fo r the year ended 30 June 2011 

27 

Statement of cash flows for the year ended 30 June 2011 

28 

Notes to the financial statements for the year ended 30 June 2011 

29 – 45 

Directors’ declaration for the year ended 30 June 2011 

46 

Independent auditor’s report 47 – 48 

Corporate directory 49 

Kenneth E. Jarvis, OAM, KSJ, B App. Sc (Hons), 

Dip OR. 


Chairman 

Chairman Nomination & Remuneration Committee 

Member Audit & Compliance Committee 


Executive Chairman – Aerolite Quarries Pty Ltd 

Executive Chairman – Jakape Pty Ltd 

Chairman - Victorian Regional Channels Authority 

Director – Gordon TAFE Ltd 

Director – Aviation Australia Development Ltd 

James E. Walsh, B.Com, MBA, FCA, MAICD. 


Deputy Chairman 

Chairman Strategy Committee (since July 2011) 

Member Audit & Compliance Committee 

Member Nomination & Remuneration Committee (until July 

2011) 


Director – Godfrey Hirst Australia Pty Ltd 

President – The Geelong Chamber of Commerce 

Sue Renkin, RN, MBA, MAICD, FCDA. 


Chair Health Services Committee 

Member Nomination & Remuneration Committee 

Member Investment Committee (since July 2011) 

Chief Executive – Open Family Australia (until October 

2010) 

Managing Director – Intuitively Focussed Pty Ltd 

Chairman – Monash Centre for Green Chemicals Future 

Chairman – Clayton Bio Medical Imaging Laboratories 

Chairman – Southern Metropolitan Cemeteries Trust 

Director – General Practice (VIC) 

Director – Northern Health 

Professor John C. Catford, MA, MSc, MB, BChir, DM, 

DCH, FFPH, FRCP, FAFPHM, FIPAA, FAICD. 



Member Nomination & Remuneration Committee (since 

July 2011) 

Dean of the Faculty of Health, Medicine, Nursing and 

Behavioural Sciences and Professor of Health 

Development, Deakin University 

Chair – Postgraduate Medical Council of Victoria 

Editor-in-Chief, Journal Health Promotion International 

Oxford University Press 

Adjunct Professor in the Faculty of Medicine, Nursing and 

Health Sciences at Monash University 

Chair – Youth Substance Abuse Service 

Chair – Kinect Australia (incorporating VicFit in Victoria) 

Director – Diabetes Australia (Victoria) 

Director – Research Australia 

Governor – Windermere Foundation 

Governor – Epworth Foundation 

Russell H. Elliott, B.Sc., M. Ed., MAICD. 


Chairman Investment Committee 

Member Strategy Committee (since July 2011) 

Associate Vice President (Administration) - Monash 

University 

Executive Director – Russell Elliott and Associates Pty Ltd 

Gerald Miller, BA, LLB. GAICD. 


Chair Audit & Compliance Committee 

Member Investment Committee (until July 2011) 

Member Strategy Committee (Sep 2010 - July 2011) 

Member Health Services Committee (since July 2011) 

Lawyer 

Director – The Geelong College Ltd 

Consultant – Browne & Co Solicitors and Consultants 

Brian G. Benger, B.Ec (Hons), AdvDip Fin Services 

(Superannuation) FAICD 

Appointed Director February 2011 



Chairman – FABAL Group 

Member – Future Fund Advisory Board, The Oaktree 

Foundation 

Director – Victorian Managed Insurance Authority 

Director – Mercer Investment Nominees Ltd. 

Michael J. Dowling, KSJ, B.Ec., FCA, SFCDA, Dip CD. 

Retired September 2010 

Chairman Nomination & Remuneration Committee 



Director – Dowling Corporate Consulting Pty Ltd 

Heather L. Wellington, MBBS, B. Med. Sci., 

BHA, FRACMA, LLB, FAICD. 

Resigned July 2010 


Lawyer 

Medical Practitioner 

Director – HPA Consulting Pty Ltd 

Chairman – IPG Ltd 

Consultant – DLA Phillips Fox Lawyers 

CHIEF EXECUTIVE: 

Mark Valena, BBus (Acc), CA, MAICD. 

COMPANY SECRETARY: 

Michael Carroll, BBus (Acc), CPA, MBA, FCIS, MAICD. 

AUDITORS: 

KPMG 

147 Collins Street 

Melbourne Victoria 3000 

BANKERS: 

National Australia Bank Limited 

(commenced September 2011) 

APPOINTED ACTUARY: 

Deloitte Actuaries & Consultants Limited 

18 19


Directors’ report 

The Directors submit their report on the financial statements of GMHBA Limited (Company) for the year ended 30 June 

2011, made out in accordance with a resolution of the Directors. 

Directors 

The Directors of the Company at the date of this report are: 

Kenneth Edward Jarvis 

James Edmund Walsh 

John Charles Catford 

Russell Henry Elliott 

Gerald Miller 

Sue Renkin 

Brian Garfield Benger 

The qualifications, expertise and special responsibilities of Directors are set out on page 19 of the financial report. 

Principal activities 

The principal activity of the Company for the financial year ended 30 June 2011 was the provision of benefits against 

claims by Fund members relating to hospital, dental and paramedical services. 

The Company, being not for profit, does not earn taxable income and is therefore not subject to income taxation. Refer 

Note 1(u). The profit for the year was $13.40 million (2010: $5.85 million). 

Review of operations 

A review of the operations and results of the Company during the financial year are set out in the Chairman’s report on 

page 6. 

Significant changes in the state of affairs 

There were no significant changes in the state of affairs of the Company. 

Matters subsequent to the end of the financial year 

There were no post-balance date events of any significance affecting or which may affect: 

(a) the operations of the Company; 

(b) the results of these operations; or 

(c) the state affairs of the Company in financial years subsequent to this financial year. 

Environmental regulations 

The Company is not subject to any significant environmental regulation. 

Information on Directors 

All Directors are members of the Company. No Director has received any benefit since the end of the previous financial 

year, by reason of any contract with the Company or with a firm of which he or she is a member or with a company in 

which the Director has a substantial interest, with the exception of the Director benefits that may be deemed to have 

arisen in relation to the following transactions entered into in the ordinary course of business: 

Directors’ report (continued) 

Meetings of Directors 

The following table sets out the number of meetings of the Company’s Directors (including meetings of Committees of 

Directors) held during the year ended 30 June 2011 and the number of meetings attended by each Director. It should be 

noted that not all Directors are members of all Committees. 

Number of 

meetings of 

Directors held 

Number of 

meetings of 

Directors attended 

Number of 

relevant 

Committee 

meetings held 

Number of relevant 

Committee 

meetings attended 

Michael Joseph Dowling* 2 2 4 4 

John Charles Catford 13 9 2 2 

Russell Henry Elliott 13 11 3 3 

Kenneth Edward Jarvis 13 13 15 14 

Gerald Miller 13 13 12 10 

Sue Renkin 13 13 5 5 


Brian Garfield Benger** 

13 

4 

13 

3 

13 

2 

13 

2 

Heather Louise Wellington*** 1 1 2 - 

* Michael Joseph Dowling retired as Director in September 2010. 

** Brian Garfield Benger was appointed to the Board in February 2011. 

*** Heather Louise Wellington resigned as Director in July 2010. 

Insurance of Officers 

During the financial year, the Company paid to insure the Directors and Officers of the Company for any liability that may 

be brought against them while acting in their respective capacities for the Company. 

The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in 

respect of the Directors’ and Officers’ liability insurance contract, as such disclosure is prohibited under the terms of the 

contract. 

Rounding of amounts 

The Company is an entity to which Australian Securities and Investment Commission Class Order 98/100 applies and 

amounts have been rounded off in accordance with that Class Order. All amounts shown in the financial statements are 

expressed to the nearest $1,000, unless otherwise stated. 

Auditor’s Independence Declaration 

The lead auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on 

page 22. 

For and on behalf of the Board of Directors, 

- As Fund members of the health fund conducted by the Company. 

Kenneth E Jarvis 

Chairman 

Gerald Miller 

Director 

Geelong, 30 August 2011 

20 21

GMHBA Limited Financial Report 2011 

Corporate governance statement for the year ended 30 June 2011 

The Board of GMHBA Limited has a governance framework to ensure that the Board complies with the relevant 

requirements of the Corporations Act 2001, the Company’s Constitution, the Private Health Insurance Act 2007 and 

Associated Rules and embodies relevant corporate governance leading practice. 

The Company is committed to achieving the highest practicable standards of corporate governance. This statement 

provides an overview of the main corporate governance practices that were in place throughout the financial year. 

Code of conduct 

The Board Governance Framework contains GMHBA’s code of conduct and has been established as the basis for 

ethical and professional conduct necessary to meet the expectation of Fund members and other stakeholders. As these 

expectations will change over time, the code is subject to regular review. 

The main purpose of a code of conduct is to provide a common understanding of the Company’s expectations in regard 

to ethical and professional conduct and to assist Directors in discharging their obligations. Achieving this objective will 

also deliver other benefits to the Company. 

Conflict of interest 

Subject to the provisions of the Corporations Act and the Company’s Constitution, the Board is empowered to regulate 

its meetings and proceedings, including the processes it will apply in instances of a declared, actual or perceived conflict 

of interest. 

Board Committees 

The Board Committees in operation throughout the year were: 

Audit & Compliance Committee 

The role of the Committee is to oversee the establishment and maintenance of a framework of internal control, to 

monitor the audit and actuarial function ensuring regulatory compliance and advise on appropriate ethical standards for 

the management of the Company. This enables the committee to give the Board additional assurance regarding the 

quality and reliability of financial information prepared for use by the Board in determining policies or for inclusion in 

financial reports. 

Nomination & Remuneration Committee 

The role of the Committee is to assist the Board of Directors in fulfilling its responsibilities for determining and reviewing 

compensation arrangements for Directors and senior management, succession planning and the appointment and 

removal of Directors. 

Investment Committee 

The role of the Committee is to advise on the Company’s total investment portfolio. 

Strategy Committee 

The role of the Committee is to assist the Board of Directors in identifying and establishing GMHBA’s future strategic 

direction in line with the Company’s mission and vision statements. 

Health Services Committee 

The role of the Committee is to assist the Board of Directors in fulfilling their responsibilities in relation to ensuring that 

all health services initiatives comply with the Company’s mission, specifically working as a trusted partner to improve 

Fund members’ health. 

Internal control framework 

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost 

effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the 

Board has instigated an internal control framework that can be described under four headings: 

 

 

 

 

Effectiveness and efficiency of operations 

Reliability of reporting 

Compliance with applicable laws & regulations 

Code of conduct 

22 23


Corporate governance statement for the year ended 30 June 2011 (continued) 

Statement of comprehensive income for the year ended 30 June 2011 

Internal audit function 

The internal audit function assists the Board in ensuring compliance with these internal controls. The Audit & Compliance 

Committee is responsible for approving the program of internal audit to be conducted each financial year and for the 

scope of the work to be performed. The internal audit function, while operationally reporting to the Chief Executive, also 

reports to the Audit & Compliance Committee. The Committee meets with the internal auditor on a regular basis. 

R evenue from operating activities 

Note 


$’000 

2010 

$’000 

Business risk management 

The Audit & Compliance Committee provides advice to the Board and reports on the status of business risks to the 

Company through an integrated risk management plan aimed at ensuring risks are identified, assessed and 

appropriately managed. 

The risk management process involves ensuring: 

 

 

 

 

 

 

Strategic, operational and financial risks are identified 

Systems are in place to monitor and manage the risks 

Reporting systems are in place 

Risk management systems are operating effectively 

Compliance with relevant legislation 

Compliance with the code of ethical conduct 

A comprehensive insurance program provides protection against major risk exposures that cannot be eliminated by 

appropriate risk management practices. 

Premium income 247,747 216,897 

Total revenue from operating activities 247,747 216,897 

E xpenses from operating activities 

Benefits paid to fund memb ers 

9 (208,030) 

(188,487) 

Payments to Health Benefits Reinsurance Trust Fund (8,663) (7,262) 

Total cost of fund benefits (216,693) (195,749) 

Gross underwriting result 31,054 21,148 

Management expenses 

Employee benefits expenses (10,228) (9,471) 

Depreciation (718) (577) 

Other management expenses (14,272) (11,784) 

Total management expenses (25,218) (21,832) 

Net underwriting result 5,836 (684) 

Revenue from outside the operating activities 

Investment income 8,889 6,550 

Unrealised investment losses (470) (82) 

Other (expenses)/income (859) 66 

Total revenue from outside the operating activities 7,560 6,534 

Profit for the year 

Other comprehensive income 

R evaluation of property, plant and equipment 

1(i), 7 

(850) - 

Total comprehensive income for the year 12,546 5,850 

Profit attributable to: 

The Company 13,396 5,850 

Profit for the year 13,396 5,850 

Total comprehensive income attributable to: 

The Company 

(850) 

- 

Total comprehensive income for the year 12,546 5,850 

The above statement of comprehensive income should be read in conjunction with the accompanying notes. 

24 25


Statement of financial position as at 30 June 2011 

Statement of changes in equity for the year ended 30 June 2011 

Current assets 

Note 


$’000 

2010 

$’000 

Cash and cash equivalents 

3 

5,181 

4,816 

Trade and other receivables 

4 13,048 

11,245 

Financial assets 

5 150,423 

141,933 

Other assets 

6 

1,517 

53 

Total current assets 170,169 158,047 

Non-current assets 


5 

2,011 

- 

Other assets 

6 

- 

104 

Property, plant and equipment 

7 

7,013 

6,601 

Total non-current assets 9,024 6,705 

Total assets 179,193 164,752 

Current liabilities 

Asset 

Retained 

earnings 

revaluation 

reserve Total 

$’000 $’000 $’000 

Balance at 1 July 2009 90,275 947 91,222 

Total comprehensive income for the year 

Profit 5,850 - 5,850 


Balance at 30 June 2010 96,125 947 97,072 

Balance at 1 July 2010 96,125 947 97,072 


5,850 

- 

5,850 

Trade and other payables 

8 

7,343 

6,424 

Provisions 

9 29,299 

30,834 

Other liabilities 

10 32,781 

30,293 

Total current liabilities 69,423 67,551 

Profit 

Other comprehensive income: 

Revaluation decrement 

13,396 

- 

- 

(850) 

13,396 

(850) 

Non-current liabilities 


13,396 

(850) 

12,546 

Provisions 

9 

152 

129 

Total non-current liabilities 152 129 

Balance at 30 June 2011 109,521 97 109,618 

Total liabilities 69,575 67,680 

Net assets 109,618 97,072 

Equity 

Retained earnings 

109,521 

96,125 

Asset 

revaluation reserve 

97 

947 

Total equity 109,618 97,072 

The above statement of financial position should be read in conjunction with the accompanying notes. 

The above statement of changes in equity should be read in conjunction with the accompanying notes. 

26 27


Statement of cash flows for the year ended 30 June 2011 


Cash flows from operating activities 

Note 


$’000 

2010 

$’000 

Premium receipts 249,006 218,257 

Investment interest 8,684 5,721 

Other (payments)/receipts (1,227) 145 

Benefits paid (217,297) (194,024) 

Management expenses (25,850) (19,036) 

1. Summary of significant accounting policies 

(a) 

GMHBA Limited is a not for profit company, incorporated and domiciled in Australia. Its registered office is 60-68 

Moorabool Street, Geelong, Victoria, 3220. 

Statement of compliance 

The Company’s financial statements are a general purpose financial report prepared in accordance with the 

requirements of the Corporations Act 2001 and the Australian Accounting Standards (AASBs) (including 

Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB). 

Net cash provided by operating 

activities 

Cash flows from investing activities 

Purchase of investment securi ties 

Purchase of property, plant and equipment 

Proceeds from sale of property, plant and equipment 

Net cash used in investing activities 

Net increase/(decrease) in cash held 

11(a) 

13,316 

(10,970) 

(1,981) 

- 

(12,951) 

365 

11,063 

(11,887) 

(1,841) 

9 

(13,719) 

(2,656) 

Cash and cash equivalents at beginning of the financial year 4,816 7,472 

Cash and cash equivalents at end of the financial year 

11(b) 5,181 

4,816 

(b) 

(c) 

The Company’s financial statements were authorised for issue on 30 August 2011 by the GMHBA Limited Board 

of Directors. 

Basis of measurement 

The accounting policies adopted in the preparation of this financial report have been applied consistently by the 

Company and are the same as those applied for the previous reporting period unless otherwise noted. The 

Company’s financial statements were prepared in accordance with the historical cost convention, except for the 

following: 

 

 

 

 

Financial instruments are measured at fair value through profit or loss 

Land and Buildings are recorded at fair value with movements in value taken through the asset revaluation 

reserve 

Rewards benefit provision is carried at present value 

Long service leave provision is carried at present value 

The presentation currency used for the preparation of these financial statements is Australian dollars. 

Australian Accounting Standards issued but not yet effective 

The following standards, amendments to standards and interpretations have been identified as those which may 

impact the entity in the period of initial application that are available for early adoption at 30 June 2011, but have 

not been applied in preparing this financial report: 

AASB amendment 

Nature of change 

to accounting policy 

Application date 

of standard 

Application 

date for 


AASB 2010-4 Further 

Amendments to 

Australian Accounting 

Standards arising 

from the Annual 

Improvements 

Process 

This Standard affects various AASBs 

resulting in minor changes for presentation, 

disclosure, recognition and measurement 

purposes. The amendments are not 

expected to have a significant impact on the 

financial statements. 

1 January 2011 30 June 2012 

AASB 124 –Related 

party disclosures. 

Revised AASB 124 replaces the incumbent 

AASB 124. The main change is the 

amendment to the definition of a ‘related 

party’. The amendments are not expected to 

have a significant impact on the financial 

statements. 

1 January 2011 30 June 2012 

The above cash flow statement should be read in conjunction with the accompanying notes. 

28 29



Notes to the financial statements for the year ended 30 June 2011 (continued) 

1. Summary of significant accounting policies (continued) 


(c) 

(d) 

Australian Accounting Standards issued but not yet effective (continued) 

AASB amendment 

AASB 9 – Financial 

Instruments 

(December 2010) 

(includes financial 

assets and financial 

liability requirements) 

AASB 2010-7 

Amendments to 



from AASB 9 


AASB 9 Financial 

Instruments 


(Financial asset 

requirements only) 

AASB 2009-11 

Amendments to 



from AASB 9 

Nature of change 

to accounting policy 

In AASB 9 (December 2010), the AASB 

added requirements for the classification and 

measurement of financial liabilities that are 

generally consistent with the equivalent 

requirements in AASB 139 except in respect 

of the fair value option; and certain 

derivatives linked to unquoted equity 

instruments. 

The AASB also added the requirements in 

AASB 139 in relation to the derecognition of 

financial assets and financial liabilities to 

AASB 9. 

AASB 9 retains but simplifies the mixed 

measurement model and establishes two 

primary measurement categories for financial 

assets; amortised cost and fair value. The 

basis of classification depends on the entity’s 

business model and the contractual cash 

flow characteristics of the financial asset. 

The guidance in AASB 139 on impairment of 

financial assets and on hedge accounting 

continues to apply. The above amendments 

are not expected to have a significant impact 

on the financial statements. 

Application date 

of standard 

1 January 2013 

retrospective 

application 

For periods 

beginning before 1 

January 2013 

entities may elect 

whether to apply 

IFRS 9 (2010) or 

IFRS 9 (2009) 

If adopted before 1 

January 2012, the 

prior period need 

not be restated 

Application 

date for 


30 June 2014 

Changes in accounting policies 

From 1 July 2010 the Company has applied AASB 2009-5 Further Amendments to Australian Accounting 

Standards arising from the Annual Improvements Process. The change in accounting policy only relates to 

disclosures and had no significant impact on the financial statements. 

(f) 

(g) 

(h) 

(i) 

(j) 

Determination of fair values 

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both 

financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or 

disclosure purposes based on the following methods and where applicable, further information about the 

assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. 

(i) 

(ii) 

Term Deposits 

The fair value of these investments is based on their listed market price, if available. If a listed market 

price is not available, then fair value is estimated by discounting the difference between the contractual 

forward price and the current forward price for the residual maturity of the contract using a market interest 

rate (based on government bonds). These investments are held for a set term and rolled over at maturity. 

Land and buildings 

The Company uses Opteon (Victoria) Pty Ltd (formerly Landlink Property Group Pty Ltd), a valuations and 

advisory services company which employs accredited independent valuers, to determine the fair value of its 

land and buildings. Fair value is determined directly by reference to market based evidence, which is the 

amounts for which the assets could be exchanged between a knowledgeable willing buyer and a 

knowledgeable willing seller in an arm’s length transaction as at the valuation date. The effective date of the 

most recent valuation was 30 June 2011. 

Cash and cash equivalents 

For the purposes of the statement of cash flows, cash includes cash on hand and bank deposits at call within 90 

days. 


The premium receivable as at 30 June 2011 consists of: 

(i) Unclosed premium earned – this represents premiums in arrears measured up to 30 June 2011; 

(ii) Unclosed premium unearned – forecast premiums receivable from policyholders at 30 June 2011. 

Property, plant and equipment 

Land and buildings are recorded at valuation (buildings are subsequently subject to depreciation) and plant and 

equipment are recorded in the financial statements at cost less accumulated depreciation and accumulated 

impairment losses. The Company engages an appropriately qualified person to undertake a full valuation of its 

land and buildings at intervals not greater than three years (see Note 1 (f)(ii)). 

Recoverable amount of non-current assets 

Non-current assets, except for investments and land and buildings are recorded in the financial statements at cost 

less accumulated depreciation. The carrying values of all non-current assets are reviewed by management at 

regular intervals to ensure that they are not stated at amounts in excess of their recoverable amounts. Except 

where stated, recoverable amounts are not determined using discounted cash flows. Management has reviewed 

the assets and are of the opinion that there has been no impairment of the asset’s current values within the asset 

classes. 

(e) 

Use of estimates and judgements 

The preparation of financial statements requires management to make judgements, estimates and assumptions 

that affect the application of accounting policies and the reported amounts of assets, liabilities, income and 

expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on 

an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised 

and in any future periods affected. 

(k) 

Depreciation 

Property, plant and equipment, other than land, is depreciated using either the diminishing value method or the 

straight line method over the period during which benefits are expected to be derived from the asset. Profits and 

losses on disposal of property, plant and equipment are taken into account in determining the profit for the year 

and recorded in other income/other expenses in the statement of comprehensive income. The following rates of 

depreciation are applied: 

In particular, information about significant areas of estimation uncertainty and critical judgements in applying 

accounting policies that have the most significant effect on the amount recognised in the financial statements are 

described in the following notes: 

 

 

 

 

Claims outstanding, see note 1(n) 

Liability adequacy test, see note 1(o) 

Reward benefits, see note 1(p) 

Deferred acquisition costs, see note 1(q) 

Buildings 

Furniture & fittings 

Office equipment 

Motor vehicles 


% 

1.5 

10.0 

15.0 - 40.0 

22.5 

15.0 

2010 

% 

1.5 

10.0 

- 40.0 

22.5 

It is possible that outcomes within the next financial year that are different from the assumptions above could 

require a material adjustment to the carrying amount of the assets or liabilities affected. 

30 31






(l) 

(m) 

(n) 

Employee benefits 

Salaries and wages and annual leave 

Liabilities for salaries and wages and annual leave are recognised and are measured as the amount unpaid at the 

reporting date based on remuneration rates expected to apply when the obligation is settled, including on-costs, in 

respect of employees’ services up to that date. 

Long service leave 

A liability for long service leave is recognised, and is measured as the present value of expected future payments 

to be made in respect of services provided by employees up to the reporting date. Consideration is given to the 

expected future wage and salary levels, experience of employee departures and periods of service. Expected 

future payments are discounted using interest rates on national government guaranteed securities with terms to 

maturity that match, as closely as possible, the estimated future cash flows. 

Health benefits risk equalisation trust fund 

Under the provisions of the Private Health Insurance Risk Equalisation Policy Rules 2007, hospital benefits are 

submitted to the Risk Equalisation Trust Fund and shared amongst all health benefit funds in the following 

circumstances: 

Where a fund has directly paid these benefits, which are proportionally less than the average of other funds in the 

State, it is required to pay to the Risk Equalisation Trust Fund an amount equivalent to the shortfall. Conversely, 

where the direct payment is proportionally greater than the average, the difference is paid to the Company from 

the Risk Equalisation Trust Fund. Eligible claims are assessed on a quarterly basis. 

Claims outstanding 

Claims that have been incurred by Fund members, but not yet presented to the Company for reimbursement, are 

estimated based on the claims experience in previous accounting periods. Outstanding claims are not discounted 

as they are usually settled within six months of the reporting date. The provision is calculated in accordance with 

the principles of the chain ladder method which can be used under the prudential regulations of the Private Health 

Insurance Industry. 

AASB 1023 requires a risk margin be applied to allow for the inherent uncertainty in the central estimate. GMHBA 

adopted a risk margin of 6% giving in excess of 90% probability of adequacy. The risk margin has been based on 

an analysis of the past experience of the Company by our Appointed Actuary on the adequacy of the provision 

over prior years. 

The liability for outstanding claims provides for claims received but not assessed and claims incurred but not 

received. The liability is based on an actuarial assessment taking into account historical patterns of claim 

incidence and processing. Changes in claims estimates are recognised in profit or loss in the reporting period in 

which the estimates are changed. 

(o) 

(p) 

(q) 

Liability adequacy test 

Under AASB 1023 the Company is required to perform a liability adequacy test to determine whether the carrying 

amount of insurance liabilities is adequate based on expected future cash flows. The test is carried out with the 

inclusion of a risk margin and is undertaken at the level of portfolio contracts that are subject to broadly similar 

risks and are managed together as a single portfolio. Any deficiency arising is recognised by writing down any 

related intangible assets, then the related deferred acquisition costs with any remaining balance being 

recognised as an unexpired risk liability. 

The liability adequacy test is required to be performed to determine whether the unearned premium liability 

(premiums in advance) is adequate to cover the present value of expected cash flows relating to future claims 

arising from rights and obligations under current insurance coverage plus an additional risk margin to reflect the 

inherent uncertainty in the central estimate. The risk margin adopted is 2.5% which corresponds to a 70% 

probability of adequacy. The reason these percentages differ from those adopted in determining the outstanding 

claims liability is that the former is in effect an impairment test used only to assess the sufficiency of net premium 

liabilities whereas the latter is an accounting policy measurement used in determining the carrying value of the 

outstanding claims liability. 

If the present value of the expected future cash flows relating to future claims plus the additional risk margin to 

reflect the inherent uncertainty in the central estimate exceeds the unearned premium liability less related 

intangible assets and related deferred acquisition costs then the unearned premium is deemed to be deficient. 

The liability adequacy testing as at 30 June 2011 did not result in any adjustment, as a surplus was identified. 

Reward benefits 

The Company operates a reward benefits entitlement for certain Fund members who have at least one year of 

eligible combined (hospital and ancillary) membership. Fund members receive an additional annual allocation of 

benefits as long as their eligible cover is maintained. In addition, the ‘Rewards’ product entitles eligible combined 

Fund members to accumulate annual allocations, which they can use to claim additional benefits. 

Provision is made for the future liability for claims under the Rewards entitlements. The Company has provided for 

the total eligible benefit to combined Fund members as at 30 June 2011 with due allowance for both expected 

timing of payments and foregone benefit entitlements on the basis that it is likely that not all Fund members will 

use their full entitlement. This allowance is reviewed periodically and the provision is currently 70% of the full 

Reward entitlement in respect of membership up to 30 June 2011. 

Deferred acquisition costs 

The Company incurs costs to acquire and establish Fund members. These costs include commission paid to 

intermediaries. Deferred acquisition costs are capitalised and amortised in accordance with the pattern of the 

incident of risk. The Company capitalises these costs and amortises them on a straight-line basis in the statement 

of comprehensive income. During the year the Company changed the period it capitalises and amortises these 

costs from three years to one year to better reflect the pattern of the incident of risk. 

The liability also allows for an estimate of claims handling costs which include internal and external costs incurred 

in connection with the negotiation and settlement of the claims department and any part of the general 

administrative costs directly attributable to the claims function. The allowance for the claims handling cost at 30 

June 2011 is 5% of the claims liability. 

(r) 

Comparative information 

Where necessary, comparative figures have been adjusted to conform to changes in presentation for the current 

financial year. Deferred acquisition costs and financial assets have been reclassified from the Company’s prior 

year financial report to conform to the current period’s presentation. 

(s) 

Unearned premium liability 

Premiums received or receivable up to the end of the financial year are recorded as revenue for the period from 

the date of the attachment of risk. Premiums received prior to 30 June 2011 relating to the period beyond 30 June 

2011 are recognised as an unearned premium liability. Also, forecast premiums receivable from policyholders at 

30 June 2011 are recognised as unclosed business premiums. 

(t) 


Liabilities are recognised for amounts payable in the future for goods and services received at balance date, 

whether or not billed to the Company. The Company’s payables are all considered short term. 

(u) 

Income tax 

The Company is exempt from income tax by virtue of Section 50-30 item 6.3 of the Income Tax Assessment Act. 

32 33





(v) 

Investments 

Investments comprise assets held to back insurance liabilities. All investments are managed and performance 

evaluated on a fair value basis for both external and internal reporting purposes in accordance with a 

documented investment management strategy. 

2. Profit 

Profit for the year includes the following specific expenses: 


$’000 

2010 

$’000 

(w) 

(x) 

(y) 

All investments are determined to be assets backing insurance liabilities and accordingly are designated as fair 

value through profit or loss upon initial recognition. They are initially recorded at fair value being the cost of 

acquisition excluding transaction costs and are subsequently remeasured to fair value at each reporting date. 

Changes in the fair value from the previous reporting date (or cost of acquisition excluding transaction costs if 

acquired during the financial period) are recognised as realised or unrealised investment gains or losses in profit 

or loss. Purchases and sales of investments are recognised on a trade date basis, being the date on which a 

commitment is made to purchase or sell the asset. 

Transaction costs for purchases of investments are expensed as incurred and presented in the statement of 

comprehensive income as investment expenses on assets backing insurance liabilities. Investments are 

derecognised when the rights to receive future cash flows from the assets have expired, or have been 

transferred, and substantially all the risks and rewards of ownership have transferred. 

Investment revenue, comprising interest is brought to account on an accruals basis. 

Revenue recognition 

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and 

the recognition can be reliably measured. The following specific recognition criteria must also be met before 

revenue is recognised. 

Premium Income 

Premium income comprises amounts charged to Fund members for insurance contracts. Premium income is 

recognised in the statement of comprehensive income from the attachment date, as soon as there is a basis on 

which it can be reliably measured. Revenue is recognised in accordance with the pattern of the incidence of risk 

expected over the term of the contract. 

The proportion of premium received or receivable not earned in the statement of comprehensive income at the 

reporting date is recognised in the statement of financial position as unearned premium liability. 

Asset revaluation reserve 

The reserve represents increments/decrements from the revaluation of the Company’s land and buildings. 

Leases 

The Company has several operating leases. The lease payments are recognised as an expense in the statement 

of comprehensive income on a straight line basis over the term of the lease. 

Net (loss) on disposal of non-current assets - (15) 

Rental expenses on operating leases 

443 

417 

3. Cash and cash equivalents 

Cash on hand 96 98 

Cash at bank 5,085 4,718 

5,181 4,816 

4. 


Unclosed premium earned 1,497 1,280 

Unclosed premium unearned 

968 

897 

2,465 2,177 

A ccrued investment income 

2,947 

2,742 

Other debtors 

488 

120 

Federal government rebate receivable 

7,148 

6,206 

13,048 11,245 

5. Financial assets 

Current 

Term deposits 

150,423 

141,933 

At fair value 150,423 141,933 

Cost 150,869 142,015 

Non-current 

Term deposits 2,011 - 

At fair value 2,011 - 

Cost 2,035 - 

The Company’s exposure to interest rate risk and a sensitivity analysis for financial assets are disclosed in note 15. 

34 35




6. Other assets 


$’000 

2010 

$’000 

7. Property, plant and equipment (continued) 

Reconciliation of the carrying amounts of each class of property, plant and equipment at the beginning and end of the 

financial year are set out below: 

Current 

Prepayments 

262 

- 

Deferred acquisition costs 1,255 53 

1,517 

Non-current 

Deferred acquisition costs - 104 

- 104 

5 3 

Land 

Buildings Furniture Office Motor Capital Total 

& fittings equipment vehicles WIP & 

Development 

costs 

$ ’000 $’000 $’000 $’000 $’000 $’000 $’000 

Carrying amount at 1 July 2010 1,955 1,719 244 1,453 25 1,205 6,601 

7. Property, plant and equipment 

Freehold land at valuation 

Land at valuation 

Buildings at valuation 

Less accumulated depreciation 

1,900 

1,955 

1,900 

1,955 

2,975 

1,745 

- 

(26) 

2,975 1,719 

Additions 

- 893 338 370 63 315 1,979 

Re-allocation 

- 1,205 

- 

- - (1,205) - 

Disposals 

- 

- (359) 

- - 

- (359) 

Revaluations 

(55) (795) 

- 

- - 

- (850) 

Depreciation 

- (47) (102) (532) (9) (27) (717) 

Write offs/adjustments 

- 

- 359 

- - 

- 359 

Carrying amount at 30 June 2011 1,900 2,975 480 1,291 79 288 7,013 

Furniture and fittings at cost 1,198 1,219 


(718) 

(975) 

480 244 

Office equipment at cost 4,457 4,086 

Less accumulated depreciation (3,166) (2,633) 

1,291 1,453 

Motor vehicles at cost 


94 

31 

(15) 

(6) 

79 25 

Capital work in progress & development costs 

315 

1,205 


(27) 

- 

288 1,205 

Total 7,013 6,601 

Carrying amount at 1 July 2009 1,955 1,745 368 1,148 21 121 5,358 

Additions 

- 

- 11 

594 31 

- 636 

Additions 

work in progress 

- 

- 

- 

- - 1,205 1,205 

Work in progress re-allocation - - - 121 - (121) - 

Disposals 

- 

- 

- 

- (30) - (30) 

D epreciation 

- (26) (134) (411) (6) - (577) 

Write offs/adjustments 

- 

- (1) 

1 9 

- 9 

Carrying amount at 30 June 2010 1,955 1,719 244 1,453 25 1,205 6,601 

8. 



$’000 

2010 

$’000 

Health Benefits Risk Equalisation Trust Fund 3,066 2,036 

Creditors and accruals 4,277 4,388 

7,343 6,424 

36 37




9. 

Provisions 


$’000 

2010 

$’000 

Current 

Outstanding claims 14,400 14,177 

Risk margin 2,447 2,419 

16,847 16,596 

Reward benefits 11,454 13,340 

Employee annual leave 662 600 

Employee long service leave 336 298 

29,299 30,834 

Non-current 

Employee long service leave 152 129 

152 129 

The reconciliation of the provisions are as follows: 

9. Provisions (continued) 

Insurance contracts (continued) 

The assets held to back insurance liabilities consist largely of money market securities, fixed interest investments and 

other highly liquid assets. Asset management is designed to ensure consistency between forecasted claims payment 

obligation and asset maturity profiles. 

Management of liquidity risk is incorporated into GMHBA’s risk management strategy. 

Insurance Risk Management 

The risk management strategy offers a level of assurance that the Company’s risks are administered thoroughly and 

astutely. The risk management plan addresses the operational risks of the Company. 

The strategy is inclusive of a risk management plan, which is the process of planning, organising, directing and 

controlling the resources and activities of an organisation in order to minimise the adverse effects of accidental losses to 

the organisation. It is recognised as an integral part of good management practice, which involves a process consisting 

of steps which when undertaken in sequence, enable continual improvement in decision-making. Risk management is 

as much about identifying opportunities as avoiding or mitigating losses. 

The risk management plan defines management responsibilities and the processes involved in mitigating any qualitative 

and quantitative risks through a set of developed guidelines. The risk management plan is subject to a formal review 

process to ensure continued effectiveness. 

Outstanding claims including risk margin 

B alance at beginning of year 

16,596 

14,921 

A dd: claims incurred 

203,786 

183,423 

L ess: claims paid 

(203,535) 

(181,748) 

Net outstanding claims liability 16,847 16,596 

Benefits paid to fund members 

Gross Claims - undiscounted 

C urrent 

207,954 

188,858 

Prior 76 (371) 

Total benefits paid 

208,030 

188,487 

Reward benefits 2011 

$’000 

2010 

$’000 

Balance at beginning of year 

13,340 

14,351 

A dd: Benefits accrued 

3,723 

4,649 

Less: Benefits utilised (5,609) 

(5,660) 

11,454 13,340 

Annual leave 


A dd: annual leave incurred 

Less: annual leave paid 

Long service Leave 

600 

534 

715 

643 

(653) 

(577) 

662 600 

Current year benefits relate to claim events that occurred in the current financial year. Prior year benefits relate to a 

reassessment of the claim events that occurred in all previous financial periods. A major component of the prior year 

movement is the release of risk margins in respect of claims payments settled during the year. In order to maintain 

strong reserves, much of this release is transferred to current reserves for which the development of claims is less 

mature and there is much greater uncertainty attaching to the ultimate cost of claims. 


A dd: long service leave incurred 

Less: long service leave paid 

427 

382 

100 

119 

(39) 

(74) 

488 427 

Insurance contracts 

Insurance contracts are defined as those containing significant insurance risk at the inception of the contract or those 

where at the inception of the contract there is a scenario with commercial substance where the level of insurance risk 

may be significant over time. The significance of insurance risk is dependent on both the probability of an insurance 

event and the magnitude of its potential effect. 

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its 

lifetime, even if the insurance risk reduces significantly during this period. The Company has determined that all current 

contracts with policyholders are insurance contracts. 

10. Other liabilities 

Unearned premium liability 31,813 29,396 

Unclosed business premiums 

968 

32,781 

897 

30,293 

Underwriting insurance contracts expose the Company to liquidity risk through payment obligations of unknown amounts 

on unknown dates. Liquidity risk is the risk of having insufficient cash resources to meet payment obligations. 

38 39




11. Notes to the statement of cash flows 

13. Contingent liabilities 

(a) 

Reconciliation of net cash provided by operating activities to 

operating profit: 


$’000 

2010 

$’000 

There are no contingent liabilities. 

Operating profit 13,396 5,850 

Depreciation 718 577 

Net gain on sale of non-current assets 

- 

12 

Revaluation of investments 

433 

515 

(Increase) in receivables 

(1,803) 

(1,591) 

Decrease/(increase) in investments 

37 

(433) 

(Increase) in other assets 

(1,360) 

(76) 

Increase in payables 

919 

3,234 

(Decrease)/increase in provisions 

(1,512) 

774 

Increase in other liabilities 

2,488 

2,201 

Net cash provided by operating 

activities 

13,316 

11,063 

14. Related parties 

Key management personnel 

Under AASB 124 “Related Party Disclosures” financial disclosures will be required for the key management personnel. 

Under the standard Key Management Personnel are defined as: 

“Those people having authority and responsibility for planning, directing and controlling the activities of the entity, 

directly or indirectly, including any director whether (executive or otherwise) of that entity.” 

Under AASB 124, non-disclosing entities must provide a breakdown of their total remuneration of their key management 

personnel in aggregate for the comparative period. 

(b) 

Reconciliation of cash 

For the purposes of the cash flow statement, cash includes cash 

on hand and bank deposits at call within 90 days, net of any 

outstanding bank overdraft. Cash at the end of the financial year 

as shown in the cash flow statement is reconciled to the related 

items in the Balance Sheet: 

Compensation of key management personnel - Directors 

Short term benefits 

No long term benefits or termination benefits were paid to Directors at balance date. 


$ 

346,132 

2010 

$ 

332,455 

Cash on hand 

Cash at bank 

96 

98 

5,085 

4,718 

5,181 4,816 

Compensation of key management personnel - Management 

Short term benefits 

1,428,989 

1,478,520 

(c) 

Standby arrangements 

The Company has no credit standby arrangements or loan 

facilities. 

No long term benefits or other termination benefits were paid to key management personnel during the 2010-11 financial 

year. 

Directors 

The names of persons who were Directors of the Company at any time during the financial year are as follows: 

12. Commitments 

Leases 

The following is a schedule by years of future minimum rental 

payments required under operating leases that have noncancellable 

lease terms in excess of one year as at 30 June 

2011. 

Kenneth Edward Jarvis 


John Charles Catford 

Gerald Miller 

Sue Renkin 

Russell Henry Elliott 

Brian Garfield Benger 

Heather Louise Wellington 

Michael Joseph Dowling 

Due: 

Not later than one year 

272 

353 

Later than one year but not later than five years 

389 

226 

661 579 

40 41




15. Financial instruments 

The Company is exposed to a variety of financial risks in the normal course of business; market risk (including currency 

risk, interest rate risk and price risk), credit risk, and liquidity risk. 

Interest rate risk disclosures 

The Company’s exposure to interest rate risk is set out below: 

16. Auditor’s remuneration 

Audit and review of financial reports and other regulatory 

returns 


$ 

2010 

$ 

120,000 110,000 


Floating/Fixed 

interest 

rate 

$’000 


Cash 

3 

5,181 

Interest Maturing in: 

1 year or less Over 1 to 5 

years 

$’000 

- 

$’000 

- 

Non-interest 

bearing 

$’000 

- 

Total 

$’000 

5,181 

17. Market Risk 

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in 

market factors. Market risk comprises three types of risk: currency risk (due to fluctuations in foreign exchange rates), 

interest rate risk (due to fluctuations in market interest rates) and price risk (due to fluctuations in market prices). The 

following policies and procedures are in place to mitigate the Company’s exposure to market risk. 

Receivables 

4 

- 

Bank term deposits 5 - 150,423 2,011 - 152,434 

Weighted average interest rate % 

5,181 

- 

150,423 

6.15 

- 

2,011 

6.73 

13,048 

13,048 

13,048 

170,663 

 

 

A risk management plan and investment plan setting out the assessment and determination of what constitutes 

market risk for the Company. 

The Investment Committee is responsible for compliance with the investment plan which it monitors for any 

exposures or breaches. It is also the role of the Investment Committee to determine action plans in mitigation of 

market risk. 

Financial liabilities 

Payables 

8 

- 

- 

- 

- 

- 

- 

7,343 

7,343 

7,343 

7,343 

Currency risk 

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes 

in foreign exchange rates. The Company does not have any foreign investments and therefore is not exposed to foreign 

exchange rate risk. 

Net financial assets 

5,181 

2010 

Floating/Fixed 

interest 

Rate 

$’000 


Cash 

3 

4,816 

Receivables 

4 

- 

150,423 

2,011 

Interest Maturing in: 

1 year or less Over 1 to 5 

years 

$’000 

- 

- 

$’000 

- 

- 

5,705 

Non-interest 

Bearing 

$’000 

- 

11,245 

163,320 

Bank term deposits 5 - 141,933 - - 141,933 

Weighted average interest rate % 

Financial liabilities 

Payables 

8 

4,816 

- 

141,933 

5.65 

- 

- 

- 

- 

11,245 

6,424 

Total 

$’000 

4,816 

11,245 

157,994 

6,424 

Interest rate risk 

Interest rate risk is the risk that the value of future cash flows of a financial instrument will fluctuate because of changes 

in market interest rate. The Company invests primarily in financial instruments with fixed interest rates which expose the 

Company to fair value interest rate risk. 

The following table illustrates the sensitivity of the net result for the year ended 30 June 2011 to a reasonably possible 

change in interest rates of +/-1% (2010: +/- 1%). These changes are considered to be reasonably possible based on 

observation of current market conditions. The calculations are based on the Company’s financial instruments held at 

balance sheet date, with all other variables held constant. 


$’000 

2010 

$’000 

+ 1% -1% +1% -1% 

Money Market Securities 

Net result (670) 681 (603) 612 

The Company actively manages its investments in high quality liquid fixed interest securities and cash for the duration of 

the fixed interest period. This should be taken into consideration when considering the impact of the above movement. 

- 

- 

- 

6,424 

6,424 

Net financial assets 

4,816 

141,933 

- 

4,821 

151,570 

42 43




17. Market Risk (continued) 

Fair Value hierarchy 

The table below separates the total investments balance based on a hierarchy that reflects the significance of the inputs 

used in the determination of fair value. The fair value hierarchy has the following levels: 

Level 1 - quoted prices 

Quoted prices (unadjusted) in active markets for identical assets and liabilities are used. 

Level 2 - other observable inputs 

Inputs that are observable (other than Level 1 quoted prices) for the asset or liability, either directly (i.e. as 

prices) or indirectly (i.e. derived from prices) are used. 

Level 3 - unobservable inputs 

Inputs for the asset or liability that are not based on observable market data (unobservable inputs) are used. 

Where the determination of fair value for an instrument involves inputs from more than one category, the level within 

which the instrument is categorised in its entirety is determined on the basis of the lowest level input that is significant to 

the fair value measurement in its entirety. 

17. Market Risk (continued) 

Credit risk (continued) 

The Company developed and adopted an investment plan to maximise return of the investment portfolio within defined 

risk categories. The Company minimises concentrations of investment risk by undertaking direct investment transactions 

with a wide variety of suitably rated financial institutions. 

The Standard & Poor’s (S&P’s) credit rating as at 30 June 2011 for the financial institution instruments held are as 

follows: 

S&P credit rating Percentage of portfolio 

AAA 2% 

A-1+ 94% 

A-1 2% 

A-2 2% 

The above table details the percentage of the Company’s investment portfolio, based on the number of investments held 

and the S&P credit rating as at 30 June 2011. 


Financial assets designated at fair value through 

profit or loss 

2010 

Level 1 Level 2 Level 3 Total 

$000 $000 $000 $000 

152,434 - - 152,434 

18. Capital Management 

The capital structure of the Company consists of cash reserves and investments representing member funds. Operating 

cash flows are used to maintain and increase the Company’s investments. The Company’s investments at reporting date 

are composed of term deposits and the Company does not hold investment in the equity market. Management and the 

Investment Committee along with the Board continue to monitor the market conditions. The Company does not have any 

external borrowings. 

The Company manages its capital to ensure it will be able to continue as a going concern and protect member funds. 

Capital reserve balances and percentage increases are as follows: 

Financial assets designated at fair value through 

profit or loss 

141,933 - - 141,933 

At 30 June 2011 the Company investments are term deposits. Quoted market rates at balance date are used to 

determine the market value of these investments. 

Price risk 

Price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in 

market prices, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or 

factors affecting all similar financial instruments traded on the market. 

The Company is not materially exposed to price risk. At 30 June 2011 the Company investments are composed of term 

deposits. The Company holds its investments to maturity and does not trade these investments. 

Credit risk 

Credit risk is the risk that one party to a financial instrument will cause financial loss to the other party by failing to 

discharge an obligation. 

Credit risk in relation to trade receivables is considered low as the balance is largely unearned. Measurement is based 

on unbiased support and taking into account past experience. The Company minimises concentrations of credit risk by 

undertaking transactions with a large number of customers/contributors. The Company is not materially exposed to any 

individual customer, however is exposed to credit risk through insurance, reinsurance and investments. 

Credit risk in respect of insurance and reinsurance receivables is actively monitored through the risk management plan 

which includes analysis of claiming patterns. 

Year $ ‘000 Increase 

2009 91,222 9.84% 

2010 97,072 6.41% 

2011 109,618 12.92% 

The Company is subject to externally imposed capital requirements under the Private Health Insurance Act 2007 and 

aims to maintain capital reserves at a sufficient level to meet Board policy reserving at 10% of total assets above the 

statutory capital adequacy requirement. The Company Capital Adequacy Reserve requirement, as per the Private Health 

Insurance (Health Benefits Fund Administration) Rules 2007, is $31.065 million. Total Health Benefits Fund Assets are 

$179.193 million, representing a surplus of $78.553 million over the Capital Adequacy Reserve and total Health Benefit 

Fund Liabilities ($69.575 million). The surplus represents 353% of the statutory requirement. 

Solvency requirement 

GMHBA’s Solvency Reserve, as per the Private Health Insurance (Health Benefits Fund Administration) Rules 2007, is 

$19.253 million. Total Health Benefits Fund Assets are $179.193 million, representing a surplus of $90.365 million over 

the Solvency Reserve and total Health Benefit Fund Liabilities ($69.575 million). 

19. Company information 

GMHBA Limited is a public company limited by guarantee. If the Company is wound up, the constitution states that each 

Company member is required to contribute a maximum of $20 towards meeting any outstanding obligations of the 

Company. At 30 June 2011 the number of Company members was 7 (2010: 8). 

44 45


46 47


Corporate directory 

60 - 68 Moorabool Street, Geelong, Victoria, 3220. Telephone: (03) 5224 8636 

P.O. Box 761, Geelong, 3220. Facsimile: (03) 5224 8659 

Email: service@gmhba.com.au 

Web Site: gmhba.com.au 

Branch locations: 

Geelong area 

Geelong 60 - 68 Moorabool Street Telephone: (03) 5224 8636 

Facsimile: (03) 5224 8659 

Belmont 178 High Street Telephone: (03) 5260 8540 

Facsimile: (03) 5244 2012 

Norlane Bellpost Shopping Centre Telephone: (03) 5274 3131 

Anakie Road Facsimile: (03) 5275 4092 

Newcomb Bellarine Village Telephone: (03) 5248 7333 

Queenscliff Road Facsimile: (03) 5248 7944 

Other areas 

Ballarat 62 Bridge Mall Telephone: (03) 5331 7855 

Facsimile: (03) 5331 4910 

Bendigo Shop 11A, Fountain Court Telephone: (03) 5442 7400 

Mitchell Street Facsimile: (03) 5443 7106 

Colac 178 Murray Street Telephone: (03) 5231 3146 

Facsimile: (03) 5231 1234 

Hamilton 182 Gray Street Telephone: (03) 5572 4444 

Facsimile: (03) 5571 9013 

Portland 112a Percy Street Telephone: (03) 5523 3376 

Facsimile: (03) 5523 6303 

Warrnambool 114 Lava Street Telephone: (03) 5562 8777 

Facsimile: (03) 5561 1737 

Perth Suite 7 168 St Georges Telephone: (08) 6266 6400 

Terrace, Perth Facsimile: (08) 9481 5568 

Affiliations: 

GMHBA is a member of: 

- The Australian Health Insurance Association 

- The Australian Health Service Alliance 

- The International Federation of Health Plans 

- The Geelong Chamber of Commerce 

- The Committee for Geelong 

- The Victorian Employers’ Chamber of Commerce and Industry 

Agency: 

GMHBA is an Agent for: 

- Allianz Insurance 

48 49

GMHBA Limited 

60-68 Moorabool Street, Geelong Vic 3220 

PO Box 761, Geelong Vic 3220 

Phone: 1300 4 GMHBA (46422) 

Fax: (03) 5221 4582 

Email: service@gmhba.com.au 

Website: gmhba.com.au 

GMHBA is a registered not-for-profit private heath insurer. 

ABN 98 004 417 092 

GMHBA Limited is a public company limited by guarantee 

and incorporated in Australia. 

Registered office and principal place of business: 

60-68 Moorabool Street, Geelong Victoria 3220

Annual Report 2011 - GMHBA Health Insurance

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