NIB delays 2.66pc premium hike, taking Covid relief to $90m

ASX-listed health insurer NIB is deferring premium hikes until September – a move it says will lift Covid-19 relief to its members to more than $90m.

NIB chief executive Mark Fitzgibbon says he does not want to downplay the financial toll the pandemic has wreaked on its members. Picture: Hollie Adams

ASX-listed health insurer NIB is deferring premium hikes until September – a move it says will lift Covid-19 relief to its members to more than $90m.

On Monday NIB followed Medibank in delaying premium increases, expected to take effect on April 1, by five months.

It comes as east coast states have resumed bans on elective surgery — the biggest revenue driver of public hospitals and source of claims from health insurers — in an effort to free up hospital staff to combat soaring Covid-19 infections.

NIB chief executive Mark Fitzgibbon said postponing the insurer’s average premium increase of 2.66 per cent was the “right thing to do” given “ongoing financial and economic pressures” from the pandemic.

“It’s a highly stressful time and I don’t want to downplay the financial toll it’s having on our members,” Mr Fitzgibbon said.

“We also recognise that many healthcare services have been suspended or delayed which has impacted our claims experience and risk equalisation commitment. By deferring premium increases we’re making good on our commitment to returning any permanent savings to our members.”

In addition, NIB has extended its Covid-19 “support package” until December 31. This includes expanded cover for pandemic-related treatment and psychology extras benefits for eligible members.

“As the pandemic continues to evolve, so has the support we’ve provided to our members,” Mr Fitzgibbon said.

The deferral comes two weeks after the nation’s peak private hospital body resuscitated its long-running feud with health insurers after recent bans on elective surgery sent their shares soaring, demanding the federal government formalise a mechanism to return a profit windfall to policyholders.

A jump in margins for the largest private health insurers – including Medibank and NIB – has already left the sector with a 212 per cent rise in profit compared to 2021, and prompted the competition regulator to put the industry on notice.

Net profits across the entire private health insurance sector totalled $1.8bn last year. Meanwhile the Australian Competition and Consumer Commission has warned health insurers against being “too conservative” in calculating Covid profits and that they must include not only deferred surgery but also skipped extras services such as a dental scale and clean.

Heath funds have returned Covid savings to members in various ways. Not-for-profits such as Perth-headquartered HBF have given members cash, while Medibank and NIB have deferred their annual premium increases instead.

While the Australian Prudential Regulation Authority told health funds they needed to set aside enough cash to fund a backlog in claims, Australian Private Hospitals Association chief executive Michael Roff said earlier this month that the expected rebound in surgery had failed to materialise.

He said the government must provide greater oversight of how health funds returned Covid-­related savings.

“There needs to be some formal government monitoring of health fund balance sheets to determine how much money they’re collecting that they thought they’d pay out – and how do we actually ensure that that gets back to members,” Mr Roff said. “To date, there’s been no process and it’s been less than transparent.”

NIB shares closed down 1.1 per cent at $6.47.