NIB targets 'unnecessary' claims
NIB said that a rising number of claims - driven by higher incomes and greater expectations of medical treatment - had pushed down its full-year earnings and was the biggest challenge to strong earnings for the current year, alongside rising hospital costs and unfavourable government policies.
NIB reported a net profit of $67.2 million for the year to June, down slightly from $67.6 million a year earlier.
Despite this, it reported a 14.8 per cent rise in premium revenues, to $1.3 billion.
Chief executive Mark Fitzgibbon said the company would try to cut the number of claims by helping policyholders "better manage their care, keep them out of hospital when there are better options than going to hospital, and make better decisions".
"There's a lot of unnecessary healthcare that occurs," he said.
NIB's pre-tax underwriting profit was $73.8 million. Its guidance was between $75 million and $78 million. Its net profit had been squeezed by one-off costs from acquiring New Zealand insurer Tower Medical Insurance, NIB said. Government constraints on premiums had also affected its earnings, the insurer said.
"Private health insurance is not only having to deal with rising medical utilisation and cost inflation among its insured population, but naked cost shifting from government to the private sector, as well as government policy, which is seeking to wind back consumer subsidies.
"Claims inflation is showing no signs of abatement; our premium pricing remains constrained by government regulation; recent government policy changes around premium rebates have been unhelpful, and competition is intense," Mr Fitzgibbon said.
While NIB says the Coalition's healthcare policies are "positive", he said the repeal of means-testing of the health insurance rebate was not "crucial to our long-term survival and prosperity as a business".
NIB's core residential health insurance business reported a net underwriting profit of $59 million, down by 8.6 per cent.
Frequently Asked Questions about this Article…
nib reported a net profit of $67.2 million for the year to June, down slightly from $67.6 million a year earlier.
nib says rising claims driven by higher incomes and greater expectations of treatment have squeezed earnings. Management plans to discourage unnecessary care by helping policyholders better manage care, offering alternatives to hospital, and encouraging better decision-making — actions aimed at reducing claims inflation and protecting future profitability.
nib reported a 14.8% rise in premium revenues, up to $1.3 billion, which shows strong top-line growth even as claims and costs pressure profitability.
nib's pre-tax underwriting profit was $73.8 million, with guidance between $75 million and $78 million. Its core residential health insurance business reported a net underwriting profit of $59 million, down 8.6% year-on-year.
Yes. nib said one-off costs from acquiring New Zealand insurer Tower Medical Insurance squeezed its net profit for the year.
nib says government constraints on premium pricing and recent policy changes around premium rebates have been unhelpful. Management also pointed to government cost-shifting to the private sector and intense competition as headwinds for the sector.
The company highlights claims inflation (including rising hospital costs), constrained premium pricing due to regulation, competitive pressure, and unfavorable government policy changes as the primary risks to future earnings.
nib plans to actively reduce unnecessary claims by helping customers manage their care better, keeping patients out of hospital where appropriate, promoting alternatives to hospital treatment and encouraging better healthcare decisions to lower utilisation and costs.
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