Drummond – who quit NAB in February after overseeing its capital raising and disposal of international assets including Clydesdale Bank – will take over as chief executive on July 4.

Medibank chairman Elizabeth Alexander on Tuesday said the board was delighted Drummond had agreed to lead the private health insurer which has around 3.9 million members.

“Craig has an outstanding reputation for his leadership capabilities, strategic thinking and business acumen. He brings with him deep experience in regulated service industries requiring a strong customer focus,” Alexander said in a statement.

Medibank, along with its peers including nib and Bupa, will increase its premiums by more than five per cent from April 1 after recently securing approval from Health Minister Sussan Ley.

Major health funds argue the fee increases are needed to help them cope with the rising costs of health care amid Australia’s ageing population.

The average industry rise of 5.59 per cent for 2016 is lower than the 6.2 per cent in 2015.

Medibank will increase its premiums by 5.64 per cent.

The insurer said Drummond’s total fixed remuneration will be $1.5 million a year, plus short- and long-term incentives.

David Koczkar, Medibank’s chief operating officer, will serve as acting CEO from April 1, when outgoing boss George Savvides retires.

Savvides, who announced in October that he would retire this year after 14 years at the helm, guided the company through the transition from government ownership to its listing on the Australian Securities Exchange in December 2014.

Medibank in February forecast annual operating profit of more than $470 million and premium revenue growth of between 4.5 per cent and five per cent.

The group booked a 58 per jump in net profit to $227.6 million for the six months ending December 31, thanks to a government-approved premium rate rise of 6.59 per cent. The performance was also boosted by a $23.2 million one-off tax benefit from the Australian Tax Office.

The result compared with a net profit of $143.8 million for the same period the previous year.

AAP