Two recent announcements reminded me that mutual friendly societies are facing similar issues to other mutuals: firstly it was announced that the Friendly Societies of Australia had joined Abacus – Australian Mutuals and secondly Manchester Unity Health Benefits Fund announced that it had entered an agreement to demutualise and merge with private health insurer, HCF of Australia Ltd.
If approved, HCF will pay $256 million and Manchester Unity 80,000 members will receive between $200 and $3000 each depending on their type of policy and length of membership.
Friendly societies were established by community and national groups in Australia in the 1830s for social reasons and to provide aid to their members in need.
Friendly societies now offer a wide range of services ranging from education savings, funeral benefits, health insurance, mortgages, pharmacy, retirement villages and aged care to superannuation.
The services offered dictate the regulation a society is subject to: in 1999, the regulation of friendly society incorporation was transferred to the Corporations Act. Regulation of societies offering financial and insurance services through benefit funds was transferred from state-based jurisdictions to the Australian Prudential Regulation Authority (APRA). Those friendly societies now operate under the Life Insurance Act 1995 (Life Act) .
Societies operating health benefit funds are regulated by the Private Health Insurance Administration Council (PHIAC) which operates under the Private Health Insurance Act 2007. When health fund business is operated directly through a friendly society, in addition to other benefit fund business, these entities are referred to as jointly regulated friendly societies under the Life Act (APRA) and the Private Health Insurance Act (PHIAC). APRA consults with PHIAC in relation to jointly regulated friendly societies.
Not all friendly societies are mutuals. The largest have demutualised.
NIB was the first health fund to list on the ASX in 2007.