NIB Holdings Looks To Cloud-Based Solutions
ASX-listed health insurer, NIB Holdings (NHF) has completed a major internal tech project to bring its corporate health insurance business onto the cloud. The move also signifies a broader push to more productive and efficient operations. Specifically, back in 2017, NIB bought GU Health for $155.5 million. Brendan Mills, chief information officer at NIB Holdings believed that the acquisition had presented an excellent opportunity to operate the main systems of record with Amazon Web Services (AWS).
Specifically, the collaboration will require in-depth discussions with Australia Prudential Regulation Authority (APRA). The APRA was initially reluctant about permitting sensitive, confidential information to be hosted by overseas firms. However, with the increase in local facilities of US tech companies, the regulatory authority has since made progressive improvements. Besides requiring less capital expenditure, shifting infrastructure out of a company’s own data centres and transiting towards cloud providers like AWS will allow NIB Holdings to utilise related services like artificial intelligence platforms and to test ideas significantly faster than all that has been possible in the past.
More recently, NIB’s managing director Mark Fitzgibbon has expressed his dissatisfaction at the health insurance industry’s community ratings scheme after the firm’s half-year profit plummeted by more than 27 per cent to $83.2 million. Ideally, the industry’s risk equalisation pool which backs the community rating scheme ensures that the public pays the same health insurance premiums regardless of their health or age.
Yet, he expressed disappointment when earnings slid despite increased revenue across the group, including in its principal ARHI (Australian residents health insurance) business. Specifically, the firm indirectly made payments of $126.5 million to other health insurers in 1H20 – a significant 10.3 per cent increase relative to the previous year. As such, the firm found it unfair for being penalised for its success in growing the market.
This is especially true in the case of its efforts to attract a younger audience who mainly pay for the risk equalisation bill. NIB holdings also witnessed a 1.4 per cent increase in its membership. Even as revenues climbed 7 per cent to $1.29 billion for the last six months of 2019, Mr Fitzgibbon cautioned that the recent spike in claims would potentially wipe out $30 million of NIB’s underlying profit. Presently, underlying profit is expected to sit at $170 million, down from $200 million previously forecasted.
On a positive note, NIB’s recent increase in health insurance premiums by an average of 2.90 per cent from 1 April marks the sixth year it has been able to deliver a premium change lower than the previous year. The move also demonstrates the firm’s commitment to ensuring health insurance remains affordable for its customers. Meanwhile, the firm has played its part for society where it declared a three-month health insurance premium waiver in light of the bushfires. Additionally, NIB Holdings has also made a donation of $1 million from unclaimed dividends to aboriginal health programs aimed to bridge the widening health gap.
By Caroline Wong
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