By Alice Uribe
SYDNEY– Nib Holdings expects health insurance claims inflation in Australia to revert to a more normal long-term average, after the sector experienced a pandemic-era decline in claims.
The Australian private health insurer on Monday maintained its outlook for claims inflation of between 4% and 6% each year in its Australian residents health insurance division over the medium to long term.
“That’s our projection,’ said Nib chief executive Mark Fitzgibbon in an interview with The Wall Street Journal on Monday.
“So, it will grow higher than what it was during Covid. But, it’s really just reverting to the long-term average.”
During pandemic-era lockdowns and other related restrictions there were significant declines in the benefits paid out by health insurers to their policyholders. Insurers in turn returned permanent claims savings to policyholders in meeting their public commitments not to profit from the pandemic.
Now, Australian private health insurers could face pressure from ongoing customer affordability concerns, which is driving more scrutiny over the cost of premiums. At the same time, some analysts think the catch up in claims after the pandemic and policyholder growth could become more challenging in the future for insurers.
For fiscal 2024, Nib maintained its guidance for net policyholder growth of between 3% to 4% in its Australian residents unit, even though uncertainty around economic conditions remains.
Instead, the insurer thinks there is still a “huge opportunity” to grow the marketplace in its share.
“It’s up for individual insurers to determine their own future when it comes to organic growth. But we certainly see huge opportunity, with 55% of the population without hospital cover,” said Fitzgibbon, who views premium pricing as being a key driver to increasing its policyholders.
“Our last two premium increases were well below industry average. So, we see price competition as important”
Australian authorities haven’t announced their annual industry average premium increase. Fitzgibbon said he couldn’t comment on where its premium pricing may be in 2024, but said that “as in every year, we will be looking to cover with premium increases, the growth we’re experiencing in claims.”
For the 12 months to December, Nib on Monday reported 3.7% policyholder growth for its Australian residents division on year. At its annual meeting in November, Nib said its July-October 2024 policyholder numbers were up 4.2% on year. At the same time, claims in the first-half rose 9.1% when compared with the previous year.
Still, Citi analysts see that Nib may have made market share gains, as rival Medibank Private lost around 1,800 policyholders over the same period.
Write to Alice Uribe at [email protected]