NIB H1 profit down 23% as insurers battle

Health insurer NIB has posted a 23 per cent fall in first-half profit, blaming higher claims for the softer result. 

The company will maintain its fully franked interim dividend of 10 cents per share even after profit slipped to $57.3 million for the six months to December 31.

Managing director Mark Fitzgibbon said the earnings result was disappointing.

“It’s especially frustrating when our revenue is actually growing right across the group,” he said on Monday.

Group revenue was higher by 6.4 per cent to $1.3 billion as members continued to use NIB services.

However an industry-wide increase in claims dragged the overall result down.

Mr Fitzgibbon said NIB’s higher payments to the industry risk equalisation pool in Australia was frustrating.

The equalisation system transfers funds from insurers with lower-than-average claim costs to those with higher-than-average claim costs.

NIB paid $126.5 million in the first half – 10.3 per cent more than the same period last year.

Mr Fitzgibbon said NIB was being penalised for its success and for attracting younger people who mainly paid the cost.

He noted all business units attracted more members.

NIB’s grew membership by 1.4 per cent compared to 0.3 per cent for the industry.

The membership result comes as Australians increasingly abandon private health insurance.

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

Australian Prudential Regulation Authority executive board member Geoff Summerhayes said earlier this month that smaller insurers were only a few years from being forced to merge or fold due to the downturn.

AAP

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