SYDNEY — Nib Holdings expects Australian health insurance claims inflation to return to a more normal long-term average following a pandemic-era decline in claims.
Australia's private health insurers on Monday maintained their outlook for claims inflation in the Australian resident health insurance sector to be between 4% and 6% annually over the medium to long term.
“That's our expectation,” Nib CEO Mark Fitzgibbon said in an interview with The Wall Street Journal on Monday.
“So it's going to increase even more than it did during the pandemic. But it's really just going back to the long-term average.”
During the pandemic-era lockdowns and other related restrictions, benefits paid by health insurance companies to policyholders decreased significantly. Insurers have returned permanent insurance savings to policyholders as they honor their pledge not to profit from the pandemic.
Private health insurers in Australia may now face pressure from continued concerns about customer affordability, with increased scrutiny on premium costs. At the same time, some analysts believe that a catch-up in claims and an increase in policyholders after the pandemic could make it even more difficult for insurers in the future.
Although there remains uncertainty surrounding the economic climate, Niv maintained its guidance of 3% to 4% net policyholder growth in the Australian resident sector for 2024.
Rather, the insurer believes there is still a “significant opportunity” to expand its market share.
“In terms of organic growth, it's up to individual insurance companies to decide their own future. But with 55% of the population without hospital insurance, we certainly see a huge opportunity.” said Fitzgibbon, adding that he believed premium pricing was the main driver of premium growth. The policyholder.
“Our last two premium increases have been significantly below the industry average, so we believe price competition is important.”
Australian authorities have not announced industry average annual premium increases. Fitzgibbon said he could not comment on premium pricing for 2024, but said: “As in previous years, we intend to offset the growth in claims with premium increases.”
Niv reported on Monday that the number of policyholders in its Australian resident sector increased by 3.7% year-on-year in the 12 months to December. At the annual general meeting in November, Mr. Nibb announced that the number of policyholders increased by 4.2% from the previous year from July to October 2024. At the same time, insurance claims in the first half increased by 9.1% year-on-year.
Still, Citi analysts believe Nib may have gained market share after rival Medibank Private lost about 1,800 policyholders in the same period.
Email Alice Uribe at alice.uribe@wsj.com.
