Nib Says Numbers Will Drop

Newcastle Herald

Tuesday May 20, 2008

GREG WENDT BUSINESS EDITOR

THE row over health insurance has deepened after Newcastle-based listed fund NIB Holdings predicted a "shock loss" of 25,000 policyholders from the Rudd Government's proposed changes to the Medicare surcharge levy.

NIB told the Australian Securities Exchange and institutional investors yesterday that it anticipated 6 to 8 per cent of its policyholders would abandon private health insurance in the 2009 financial year.

Managing director Mark Fitzgibbon said the changes would adversely affect sales and lapse rates in the industry.

NIB shares closed up one cent at 71 cents after falling 16 per cent when the proposed rule changes were revealed on Monday.

The Federal Government has been under fire since last Tuesday's budget, when it raised the payment threshold for the Medicare surcharge, which applies to people without private insurance, from $50,000 to $100,000 for singles and from $100,000 to $150,000 for couples.

Treasury estimates about 480,000 people could abandon private health insurance, but an industry report released at the weekend claimed the figure could be almost double that, putting pressure on the public hospital system.

NIB believes the changes to the surcharge would reduced sales growth over the near term by between 13 to 17 per cent than the company had been experiencing.

"However, we believe the primary drivers that make private health insurance so attractive still very much exist," Mr Fitzgibbon said.

The company confirmed yesterday that it expected to achieve in excess of 35,000 net new policyholders in the 2008 financial year and expected a normalised net underwriting margin of more than 3 per cent.

Mr Fitzgibbon said he was very positive about the industry's outlook, as well as NIB's outlook and prospects for growth.

He said the company had a good product, good brand recognition and knew what was needed to increase enterprise value.

NIB had carried out a thorough internal analysis of the proposed changes, but emphasised there was no historical experience to guide the assessment and actual experience could vary.

Mr Fitzgibbon said NIB, Australia's only listed health fund, increased its policyholder base by 19.8 per cent in the two years to March 31, compared with industry growth of 8 per cent. with AAP

© 2008 Newcastle Herald

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