The Medibank Private Ltd (ASX: MPL) share price is surging more than 4% higher today to start the pre-Christmas trading week strongly.
This follows a market update this morning on changes to its health insurance premiums from April next year.
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Why is the Medibank Private share price surging?
The Aussie private health insurer has received approval to increase its Medibank and ahm health insurance premiums. From 1 April 2021, premiums will rise by an average of 3.25% – the lowest average premium increase in 20 years.
The Medibank share price has rocketed 4.1% higher to $3.05 per share today. The news buoyed investors in an otherwise soft day of trade on the ASX across sectors.
It's been a tough year for Aussie health insurers with the Medibank share price falling 4.2% lower in a year dominated by coronavirus concerns.
The story is similar for the NIB Holdings Limited (ASX: NHF) share price today. Shares in the rival health insurer have climbed 3.1% higher today but remain down 9.5% for the year.
The NIB share price has also surged after the company announced an average premium increase from 1 April next year of 4.36% across all products. In contrast to Medibank, that premium increase is higher than the 3-year average premium increase of 3.55%.
NIB managing director Mark Fitzgibbon noted the impact of the planned premium increase. NIB's annual average premium per single equivalent unit will be $2,844 compared to an industry average of $3,119.
Foolish takeaway
The Medibank share price has been a bright spot in a soft start to the week for the S&P/ASX 200 Index (ASX: XJO).
The benchmark Aussie index is down 0.1% to 6,669 points as COVID-19 concerns continue to hang over markets. WiseTech Global Limited (ASX: WTC) and AGL Energy Limited (ASX: AGL) are among the biggest losers on Monday.
Medibank now boasts a market capitalisation of $8.4 billion with a price to earnings (P/E) ratio of 26.7 and a 3.9% dividend yield.
