Nib boss warns lockdowns, virus fears equal fewer health treatments

The boss of health insurer Nib has warned that persistent coronavirus lockdowns will result in fewer healthcare treatments across the country, making it difficult for the company to forecast future earnings.

Mark Fitzgibbon said on Monday morning that the fund would be targeting policyholder growth of between 2 and 3 per cent in 2022 – but while memberships are expected to rise, it was tough to predict exactly how many claims would be made.

Nib recorded an 84 per cent jump in net profits for the 2021 financial year, hitting $160.5 million.Credit:Chris Hopkins

“There will be less healthcare treatments of all kinds as long as lockdowns persist, people continue to fear infection and social distancing reduces the incidence of other diseases,” he said.

Nib recorded an 84 per cent jump in net profits for the 2021 financial year, hitting $160.5 million. The company confirmed it would hand back $15 million to eligible members as an automatic adjustment to their next premium payments to continue to support its base throughout the pandemic.

Profits were slightly below Bloomberg consensus estimates of $168 million income.

Nib also recorded a 14c fully-franked final dividend, up from 4c the same time last year. Mr Fitzgibbon was keen to warn that like 2020, the 2021 financial result did not represent a “normal” year for the insurer, however. Nib had recorded provisions last year to account for “catch-up” treatments delayed by coronavirus lockdowns, but the bounce-back had been slower than expected.

“While there was some catch-up of deferred treatment during the year it was less than initially anticipated. It’s likely best explained by people’s ongoing fear of COVID-19 infection and continued lockdowns,” Mr Fitzgibbon said.

The fund has retained a $34 million provision for future catch-up claims. It hit total policyholder growth of 4.2 per cent for 2021, and total premium revenues up close to 5 per cent to $2.2 billion.

Conditions were much less rosy in the company’s international insurance and travel divisions, however, with travel revenues declining 74 per cent for the year.

“Pre-pandemic in FY19, together these two businesses [travel and international insurance] contributed $41.5 million to Group earnings compared with a loss of $19.5 million in FY21. It speaks of the opportunity ahead and we’re using the current hiatus to modernise our systems and improve operating efficiency,” Mr Fitzgibbon said.

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