NIB health premium shocks

Don Sewell, 80, was shocked when health insurer NIB told him his monthly health insurance premium would rise to $620.

That covered both him and his wife, but it was a massive rise from the $478 they were being charged beforehand. It would have been higher had he not had a no-claims bonus on the policy.

Annual premiums of nearly $7500 were just too much for Sewell, a veteran of the insurance industry, and he phoned NIB to tell the insurer he was going to let the policy lapse.

What happened next left him feeling angry. He was given a new quote, this time for $370.51 for similar cover, albeit with lower maximum claims. He now feels he has been paying too much for too long.

‘‘If I had complained last year, I could have saved myself thousands.’’

Sewell said that when he called, the NIB staffer told him that if he hadn’t complained, he’d have been paying $620.

NIB chief executive Rob Henin said Sewell was on a type of policy that the company had inherited from an acquisition and was working to improve. He said the insurer had been on the point of offering Sewell a better deal anyway.

Sewell let the policy lapse and wrote to NIB in protest.

Sewell’s policy was an old Tower policy, and Sewell said he had been an agent for Tower for many years.

NIB, which is listed on the Australian Stock Exchange, bought Tower’s health insurance business in 2012. Henin said NIB has been looking at the old Tower policies and offering policyholders better deals.

‘‘Mr Sewell has been the recipient of us trying to do a better job; trying to innovate and reconfigure the market, which has some structural problems,’’ Henin said. ‘‘ He has come to us, and we have worked to offer him a better deal, and that is exactly what we are trying to do.’’

The way the old Tower policies were designed meant there could be sudden spikes in premiums when people passed certain ages, as happened in the case of Sewell and his wife.

Henin said NIB, which is the country’s second-largest health insurer, had come to New Zealand to rejuvenate the health insurance market. Part of that, he said, was working through Tower’s old policies and progressively offering better deals to policyholders.

NIB had been using the renewal dates to make offers to move people onto more modern, affordable policies but it was a process that took time, Henin said.

NIB was on the point of making such an offer to Sewell, who had a knee and a hip replaced on his insurance, when he called up to cancel, he said.

Moving people onto the modern policies meant retaining customers for longer and fitted with NIB’s strategy, Henin said.

‘‘At NIB we believe health and medical insurance should be easy to understand, easy to claim on and, most of all, good value,’’ he said.

‘‘That’s why we have a range of products, with different levels of product benefits and no-claims discounts, to ensure we can provide the best value health cover to our customers, no matter what their age, budget or life stage.’’

Henin said NIB encouraged people to talk to their financial advisers each year, but if anyone felt they were being overcharged and there might be a better option, like Sewell they should call NIB directly.

Switching policies was not the only way to help keep cover affordable, Henin said.

‘‘With regards to product affordability, we have a range of options available to our customers to ensure they retain their valuable cover, ranging from increasing their excess level, taking out a different product or, if applicable, reducing the level of no-claims discount.’’

Henin said he regretted that Sewell was no longer a policyholder.