Steve Crane
Steve Crane
“Our only certainty is that Covid-19 will, at least for the near term, have a significant impact upon the private health insurance industry (PHI) and our business,” group chairman Steve Crane said, in a letter to shareholders.
He said concern about Covid-19 and disease risk was boosting health insurance sales and retention in both its Australian and New Zealand businesses.
There was a risk of economic recession and increasing unemployment in future. “Whatever the case, we believe near term it is reasonable for us to target a growth rate of 1% to 2% in both the Australian and New Zealand markets.”
There was also a likelihood that there would be fewer claims.
“In times of pandemic and deep concern about the safety of hospitalisation and treatment, people and their doctors may avoid or delay discretionary treatment. This same reluctance also applies to allied or general treatment services such as dentistry.
“At the time of preparing this update, there is only limited quantitative evidence to support this hypothesis. However, it is early in the Covid-19 cycle in Australia and New Zealand and there is significant anecdotal evidence to suggest elective surgery across private hospitals will decline significantly within the weeks and months ahead. Importantly, private hospital operators appear to share this view. Private health insurance funding accounts for approximately 83% of all private hospital admission.”
Crane said nib calculated that for every 1% drop in hospitalisation for the remainder of 2020 PHI claims expense (including risk equalisation) would fall by $8.8 million and a 1% drop in dental treatment would reduce claims expense by $3.5 million.
“I’d like to add that beyond supporting our members and travellers, nib is totally committed to playing a role in ameliorating Covid-19. We are exploring and open minded to how we, and PHI, could assist in disease containment and public health.”
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