Australia's only listed health insurer NIB will actively try to discourage its policyholders from seeking "unnecessary" medical treatment so it can strengthen its bottom line.
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.