NIB flags smaller premium rises

A slowdown in claims inflation has helped health insurer NIB Holdings book a solid rise in annual profit.

A doctor checking a young woman’s blood pressure.

NIB Holdings has been assisted by a slower increase in claims inflation over the year, booking a solid rise in annual profit and allowing chief executive Mark Fitzgibbon to flag smaller premium increases.

The health insurer (NHF) today booked a net profit of $92.9 million for the year through June, a 22 per cent increase year on year.

Profit was helped by a slowdown in claims inflation, which boosted the group’s margin from 13.3 to 14.9 per cent.

Revenue was up 13 per cent to $1.89 billion, and NIB said all divisions of its business were growing customer bases and improving earnings.

The group’s Australian residential health insurance business booked a 3.8 per cent increase in policyholders, well above the industry average of 1.3 per cent.

Chief executive Mark Fitzgibbon said this “was a solid result given tough market conditions and ferocious competition”.

“Lower claims inflation is certainly a welcome development given the pressure on premiums and affordability,” Mr Fitzgibbon said. “If this continues we can look forward to lower premium increases than those of recent years when the combination of increasing treatment cost and the actual number of treatment episodes have driven claims inflation rates of between 5 and 7 per cent.”

“I get a little frustrated when industry commentators talk and write about premium increases being twice the rate of CPI. I’m very sensitive to the impact premium increases have on household budgets and we do need to do more as insurers to rein in spending. But claims inflation is mostly the consequence of people having more healthcare treatment rather than the cost of a treatment.”

Over the course of the year, NIB’s Australian health insurance claims expense rose 7.7 per cent, while hospital paid claims were up 12.4 per cent.

NIB will pay a dividend of 9c per share, bringing the year’s total distribution to 14.75c.