Private health insurer Medibank's annual profit has grown by 84 per cent but its boss says the industry is in a volatile period as customers rush to switch providers.
The reduction of rebates under the previous federal government was a major reason for the high rate of customer movement or people reducing their level of cover, chief executive George Savvides said.
The nation's largest private health insurer made a profit of $233 million in the 2012/13 financial year.
Growth from the previous year was due to stronger performances from its healthcare business and investments, plus a 12 per cent profit rise in health insurance.
Medibank's improved bottom line potentially improves its selling price, as the new federal government prepares to privatise the business in its first term.
Mr Savvides said he thought the industry was in the middle of what was possibly the most intense period ever for volatility and competition.
He cited a doubling of marketing and promotional costs, the emergence of comparison aggregator websites such as iSelect, and new government rules around means testing rebates.
"People are now receiving less discounts, some none at all through the rebate and they are getting big increases on their premiums," he told AAP.
"They are looking for other options, ringing their health insurers or looking elsewhere and we have seen the churn rate and lapses rates grow."
Medibank still managed to lift its number of members by more than 150,000 to 3.8 million, or 29.5 per cent of the private health insurance market.
Premiums increased 6.2 per cent, slightly above the industry average.
The number of claims by health insurance members grew 6.9 per cent to $4.73 billion - or $90 million a week - with 81 per cent of members claiming.
That would only increase with an ageing population and customers that are more educated about what healthcare options were available to them, Mr Savvides said.
The business had reduced its costs by $50 million due partly to a tougher approach with providers, which manifested in a public stoush over funding with private hospitals operator Ramsay, which has now been resolved.