Jenée Tibshraeny weighs up whether nib's new health insurance products are using gimmicks to sugar-coat, or substance to justify, price increases

By Jenée Tibshraeny

The country’s second largest health insurer is hiking the cost and improving the quality of some of its basic products, as it pitches to migrants, millennials and young families.

nib has deepened and broadened the cover of the products it sells direct to better cater to “an increasingly diverse population”.

Yet you’ll pay up to 69% more in premiums for nib’s new suite of products, which supposedly include benefits attractive to less-insured demographics of society.

The question is: is the insurer using gimmicky offerings to sugar-coat premium increases, or will the improved cover be worth the price hikes?

Let’s take a look.

Everyday cover

nib has included a raft of new and improved benefits to its Everyday products. These provide cover for day-to-day health costs like dentist, GP, physio and optometrist appointments, rather than hospital visits.

While nib has added titbits of cover, collectively worth a couple thousand dollars, it has removed a $5000 benefit for specialist consultations and diagnostics, as well as a $300 benefit for GP minor surgery.

The question is whether cover for the likes of acupuncture, traditional Chinese medicine, vaccinations, speech therapy and osteo appointments is more valuable than specialist appointments and minor GP surgery that may be linked to more costly and serious health problems.  

nib CEO Rob Hennin says this sort of cover is relevant to what people are demanding.

Asked about the removal of specialist consultations and diagnostics, Hennin says: “We weren’t seeing a huge use of that benefit in the Everyday products.”

Turning to price, the insurer has attempted to keep things simple by charging all Everyday policyholders the same premium, regardless of their age or state of health.

This has seen the cost of nib’s standard product increase by a whopping 69%, and its premium product by 40%.

In theory, having a flat rate means healthy policyholders are effectively subsidising the premiums of less healthy and thus more risky policyholders.

Hennin doesn’t accept this, saying nib underwrites its products on their own merits.

The interesting thing is, the demographics nib is targeting its Everyday products to - migrants, millennials and young families - are most likely fairly healthy.

Southern Cross Health Society comparison

Weighed up against a similar basic day-to-day health costs product offered by Southern Cross Health Society, nib’s offerings are both more comprehensive and more expensive.

The backbone of Southern Cross’s HealthEssentials product is similar to nib’s, providing cover for GP, dentist, optical and therapeutic care costs.

However, Southern Cross doesn’t provide cover for what you could describe (perhaps minus the mental health cover) as the bells and whistles that nib does.

As for price, Southern Cross’s HealthEssentials is generally cheaper than nib’s Everyday products.

The price differences are most apparent with younger policyholders, due to Southern Cross having a regular tiered pricing structure that sees less risky policyholders pay less for cover.

The only instance in which nib would be cheaper, is if an older person (age 50) wanted its Standard product; a scenario which is highly unlikely as the product isn’t targeted towards this sort of person.

A 50-year-old is likely to either have no health insurance, or opt for more robust cover that would cover them if they got cancer or needed a hip replacement for example.

Hospital cover

The idea behind nib’s Everyday products is that they can be bought in conjunction with its Hospital products, which provide cover for the big things like cancer treatment, surgical procedures and diagnostic investigations.

As a part of its new direct-to-customer product launch, nib has increased the cost and cover of its Hospital products.

It’s difficult to make exact comparisons with its old offerings, as it has consolidated three products in to two.

The greatest improvements in cover are between the former lowest level product and the new standard product.

The $150-$300 over two years gym or sports membership benefit, aimed at young people, is most certainly a gimmick.

However pushing nib’s marketing pitch aside, the increase in cancer-related benefits are substantial.

The cost of nib’s premiums for Hospital cover has also increased by 19%.

Interestingly, the cost of the nib's Hospital cover isn't a whole lot more than its Everyday cover, even though the benefits of Hospital cover have a much higher monetary value and provide cover for more serious health problems and thus more costly treatments.

nib also has a range of more robust products, which you can buy through an adviser or receive through your employer.

Here are documents from nib outlining the above changes to its Everyday and Hospital policies.