Savings worry over virus

NIB chief says long battle could impact on capital

NIB will easily handle postponing premium increases, but boss Mark Fitzgibbon can see a possibility that the coronavirus crisis could ravage its savings.

Private health insurers on Sunday said they will postpone April 1 premium increases, which average 2.9 per cent, for at least six months to help Australians manage the financial toll of the pandemic.

The industry announced a range of measures to help customers after talks with the federal government.

Mr Fitzgibbon (right) yesterday told analysts the insurer

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Change supported the postponement and would easily accommodate it.

The cost of the deferred premium increase would be funded from savings, he said. Mr Fitzgibbon said he did not believe the postponing of the increase would alter the economics of the next six to nine months for NIB.

However, he was concerned about a prolonged battle with the virus. NIB management saw the possibility of the crisis continuing to use up its capital savings, Mr Fitzgibbon said.

“At some point, we need to think about what we do,” he said. Businesses across industry are offering financial hardship payment options to customers after many Australians lost their jobs from the coronavirus impact.

Government restrictions on travel, and the temporary closure of social venues, have put many thousands of Aussies out of work.

Mr Fitzgibbon was open to NIB providing more help for customers if needed. “If we think some sort of rebate to our members next year or whenever will help improve retention and preserve our (customer) base, that may be an option for us,” he said.

Sophie Walsh, health insurance specialist at product comparison website Finder, said it remained to be seen whether the postponing of premium increases would stop Australians cancelling private health insurance.

Only 44.1 per cent of Australians have hospital cover, the lowest level since 2007.

HBF was among the first in the industry to make a decision on premium increases. Last week the not-for-profit insurer cancelled its increase.

Elsewhere in the insurance industry, QBE has withdrawn earnings guidance due to the pandemic.

IAG has completed the sale of its 26 per cent interest in SBI General in India for a net profit $310 million.

The sale was first announced in October and has increased IAG’s regulatory capital position by nearly $450 million.