Given a choice between everyday living and health insurance, which one would you opt for? It is ironic that people are having to choose between these two in the first place, but most are opting for the first. As living costs rise, people are cancelling their health insurance, urging companies like Aussie healthcare fund NIB Holdings (ASX: NHF) to return some unclaimed fees back to their customers, amounting to $40 million collectively.
Over 600,000 nib customers will qualify for a share of the refund, which will be directly deposited into their bank accounts in November. Along with the cost of living, Covid-19 disruptions caused people to give up their health insurance and re-evaluate their spending.
Managing Director, Mark Fitzgibbon, commented, “We saw a significant reduction in hospital and healthcare treatment [due to Covid-19]. To date, the volume of catch up in claims has been lower and slower than expected, which is why we’re able to return a further $40 million to our members.”
Thankfully, the Company had an inkling about what could happen as a consequence of the pandemic. So, from the beginning, nib set aside funds, valuing up to $100 million, to help cover costs for any claims that catch up once services return to normal.
Last year, nib provided $15 million in a one-off COVID credit, reflecting claims savings made during that year. The credit was applied as a discount to premium payments from September 6, 2021.
As for the $40 million give back, the amount members receive will vary based on their chosen policy and cover. Members with Hospital and Extras combined policies will receive on average about $71; those with Hospital Only policies $47, and those on Extras Only policies $15.
In a bid to prevent people from leaving, nib delayed a premium increase that was due in April this year. However, in light of members pulling out of the deal, the Company is bringing back the premium increase at 2.66%, nib’s lowest in 20-years. It will come into effect from November 1, 2022.
Moreover, nib extended COVID-19 cover to December 2022, and will continue to provide telehealth services which were introduced at the start of the pandemic.
Along with the $40 million give back, the Company will increase its investment into targeted health management programs by $5 million. This way, it will provide members with access to professional support services to manage cancer treatment, mental health, diabetes, cardiovascular conditions, and weight loss.
The Company is also driving people’s attention to its Payer to Partner program to urge people to consider health insurance as more than a financial protection.
Fitzgibbon noted, “This was an extraordinary period that had wide reaching impacts across society and nib’s COVID-19 support package now totals around $145 million.” However, the Company is unsure as to whether it would be able to continue providing these benefits given people’s change of priorities.
In FY22, the Company’s net profit after tax was down 16.6%, driven by investment losses. Additionally, health insurance claims fell 3.1% to $1.5 billion as the COVID-19 lockdown impacted both people’s willingness and ability to access services as well as clinical providers’ capacity to accommodate treatment.
In the coming year, the nib is hoping for a return to normal, allowing people to invest in healthcare services. For now, however, the COVID give back will be automatically paid to the nominated bank account of eligible members by 30 November 20222 and numb a little bit of the pain coming from their premium increase.
Alinda is a Business Reporter for The Sentiment
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