Western Australia-based health insurer HBF has announced it will close five branches within its network, arguing that the demand for digital has superseded the need for an extensive physical branch network.

The not-for-profit health insurer announced the closure of five of its 14 branches across its home state of Western Australia, including three regional touchpoints (Albany, Kalgoorlie, and Mandurah) as well as two in the metro area (Rockingham and Floreat), as part of a broader effort to slash its excessive cost base.

The health insurer recorded a reduced loss of $20 million for FY2023, down from $96.9 million in the previous financial year. While income reached $69.0 million, this was more than offset by $96.0 million in transformation program expenses, largely invested in the firm’s five-year tech overhaul.

Commenting on the branch closures, HBF chief executive Lachlan Henderson said for the health insurer to continue to provide “value to our whole membership base, [it] must balance meeting the needs of our members with operating a sustainable business model”.

In backing his decision, he said HBF had kept average premium increases “below industry averages over the past five and ten years” whilst also maintaining “a strong claims payout ratio”, which, according to the firm’s most recent annual report, reached 87.67 per cent for FY2023.

“We also focus on providing quality support to our members via our call centres and branches as well as investing in our increasingly popular digital channels,” Henderson added.

Figures from HBF reveal that branch interactions have declined by nearly half over the last three financial years – from 9.3% to just 5.3% of all interactions – with most interactions now happening through the health insurer’s call centres.

Last financial year, HBF reported that its call centre reps responded to around 775,000 inquiries via telephone, email and web chat; its branches, meanwhile, saw 260,800 visits.

The most recently announced branch closures come following the shuttering of two of HBF’s metro branches (in Success and the Perth CBD) mid-last year.

Commenting on the Perth branch closures in its FY23 report, HBF noted that it still maintained “the biggest branch network of any health insurer across WA”, adding that it would remain “committed to servicing members who prefer face-to-face interactions”.

Set to conclude its five-year digital transformation program this year, the firm announced in its annual report that it would move to “develop a new plan… guided by continuing to provide value for HBF members”.

“Our focus during the year ahead is to complete our technology transformation program, retain and ideally grow market share, and continue to refine our operating model in an increasingly digital world. “

Outlining the slew of new capabilities and efficiencies being delivered through digital, HBF said its tech and operations modernisation program “will provide greater insights into our members’ claiming behaviours, enabling us to better predict and meet their evolving health and wellbeing needs”.

“We will also be able to streamline back-end processes and deliver on our Member Value Proposition of being affordable and available in a way that is most convenient to our members.

It added: “New functionalities and features will enable prospective members to source health cover quotes easily.

“Existing members will access instant resolutions when changing personal details, improved self-service interactions when making updates to their policy, and a personalised and user-friendly journey when engaging with our website and app, plus much more.”

The decision to close more of its branch network was “not taken lightly”, Henderson said, adding that the firm “[acknowledges] the impact this will have for some of our members and people”.

“We will be reaching out directly to our members who have recently used the affected branches on how we will assist them during this transition,” he added.

As at the end of FY2023, HBF counts more than 1,100,000 members, with over 560,000 policies in force. The firm, primarily based in WA with a small presence in Queensland, holds a 7.74 per cent share of Australia’s health insurance market.