NIB sales in poor health

Insurer hit by virus but fewer claims soften blow

NIB suffered a 22 per cent drop in sales of health insurance in April compared with the same period last year, although this may be offset by fewer claims.

NIB sold 2179 fewer of these policies (7684 total) than in April 2019 as many Australians cut their spending due to the COVID-19 crisis and economic downturn.

NIB told the Australian Securities Exchange that 10,993 policies lapsed last month. This was 3058 more than in the same month last year.

Management described the figures as unfavourable but manageable and NIB hopes to recover some of its losses from fewer claims during the pandemic. Elective surgery was postponed to help hospitals deal with an influx of COVID-19 patients and has recently resumed.

NIB said since coronavirus restrictions were imposed, its dental and optical expenses had been about 40 per cent of what it would usually expect. Customers’ claims for doctor and hospital visits, which make up the bulk of costs, were harder to estimate because they can take up to three months to be received, NIB says. Some health insurance customers have argued they should be compensated for the period in which elective surgery and other treatments were unavailable.

NIB chairman Steve Crane said there was a possibility of a cash refund but the full extent of the coronavirus crisis was yet to be known.

He said compensation would be considered when a better indication of savings was available in June.

In its trading update, NIB said its international visitors business, which provides insurance to foreign workers and students, would remain profitable despite the COVID-19 impact.

Its travel insurance division would make a loss and investment income would be well down.

Mr Crane ( pictured) said management were not in a position to provide guidance for full-year results.

NIB shares were trading lower by 4.0 cents, or 0.83 per cent, to $4.78 at 10.10am yesterday and have lost 23.13 per cent since January 1 amid a wider market downturn.

NIB has postponed its premium increase by six months to October. Most health insurers have done likewise after many Australians lost their jobs due to restrictions to slow COVID-19’S spread.

Rival Medibank Private on Wednesday reported slightly more than 1.0 per cent of customers had suspended policies due to the pandemic.