AI saves NIB $22m, but will it solve hospital crisis?

One of the nation’s largest private health insurers says its AI investments have returned $22m.

NIB chief technology officer Brendan Mills.

One of Australia’s largest private health insurers says its investments in artificial intelligence have saved it $22m and reduced the need to hire more staff in certain departments.

But Newcastle-based health insurer NIB has declined to say whether the savings – which are growing – could help solve Australia’s private healthcare crisis.

Private hospitals’ negotiations with their main funders, private health insurers, have become increasingly tense as they battle high inflation.

NIB experienced this first-hand last year when St Vincent’s threatened to tear up its contract. The pair later struck an 11th hour agreement, but other health insurers have found themselves in similar stand-offs with Healthscope and Australia’s biggest private hospital operator Ramsay.

NIB, which made a $181.6m profit off $3.3bn revenue last year, stresses that its AI savings are in their early days, and declined to comment on whether they could help make hospital negotiations less fraught and take pressure off premiums.

It said it generated its savings from its digital assistant Nibby, which uses AI for interactions with customers. It has allowed its customer base to grow without the need to hire more customer service workers.

About 60 per cent of the inquiries it handles are considered to be non-major or easily answered with the help of a chatbot, according to NIB technology boss Brendan Mills.

Nibby had reduced the need for human digital support by 60 per cent and reduced the number of phone calls between customers and customer service agents by 15 per cent, equating to $22m in savings since 2021, Mr Mills said.

Customer interactions with NIB's digital health assistant.

NIB has largely put the savings back into its investments in technology, including the Claude 3.5 Sonnet model, which powers its workloads in the AWS cloud.

The private health insurer’s savings are in stark contrast to scores of Australian businesses who say they are yet to see a return on their AI investment, according to a Cisco index.

That research, which quizzed 3660 senior business leaders from companies with 500 or more staff across 14 countries in the Asia-Pacific, found that Australian companies had been given an artificial intelligence reality check. About 58 per cent of those who had invested in AI programs and applications said the technology has fallen short of ­expectations.

Mr Mills told The Australian that NIB too had gone through some trial and error but had ultimately found a sweet spot with Nibby.

“Across some of our segments, we’re now obviously able to do more with less or more with the same (resources),” he said.

“There is also the reality that in some cases recruitment hasn’t needed to go as hard or as fast as what we ordinarily would have.”

NIB customers were increasingly comfortable with digital interactions, which had freed up staff to spend time on other areas, including health management calls.

“I think there’s a real resonance with customers that they’re happy to perform some of those lower level tasks in the digital channels, and in fact, that resonates with them from a customer satisfaction point of view,” Mr Mill said.

NIB is using AWS’s Amazon Bedrock product to power Nibby. AWS says the technology can personalise interactions with members and ask follow-up questions to resolve issues quickly. Amazon Bedrock also summaries notes from the calls and trains on those notes to handle other inquiries faster.

AWS head of financial services Jamie Simmons said he believed AI would continue to be used to “free employees up for more high value customer interactions, optimise operations, and building enduring customer experiences”.

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Jamie Simon, Director of Financial Services, AWS

Some companies say using AI to solve customer issues is far more efficient than using human workers.

The chief executive of helpdesk Software-as-a-Service business Zendesk, Tom Eggemeier, last year told The Australian that data from AI customer interactions was now being used to train human staff.

Zendesk counts Uber, Grill’d, Catapult, Freedom Furniture, LJ Hooker, REA Group, MYOB and The Iconic among its local clients.