Australia: Health funds return $1.4bn profits to meet COVID-19 commitments
Source: Asia Insurance Review | Jan 2023
Health insurers have handed back to policyholders about A$2.1bn ($1.4bn) of the profits they gained from a reduction in claims between the start of the pandemic and 30 June 2022, according to the latest report of the Australian Competition and Consumer Commission (ACCC).
Figures submitted by insurers to the Department of Health and Aged Care show insurers’ estimated permanent savings due to claims not made during the pandemic were about A$2.25bn as of 30 June 2022. Some insurers have also reported additional measures they will take to return the remaining savings to policyholders this financial year.
Most insurers define ‘permanent claims savings’ as all missing claims due to the pandemic, less claims expected to materialise in future (the ‘deferred claims liability’).
The report shows that most funds have been returned through premium relief (about A$1.08bn), especially deferral of premium increases. This is closely followed by direct payments to policyholders (about A$847m), and a smaller amount has been allocated to other measures such as hardship support and coverage extensions (about $160m).
The report shows that COVID-19 restrictions continued to limit policyholders’ access to non-urgent elective surgery and non-urgent extras treatments such as dental and optical services in 2021-22. This was particularly so in Victoria and New South Wales during the extended lockdowns in the second half of 2021, but also more broadly during the Omicron wave in early 2022.
This in turn led to significant declines in benefits paid out by insurers to policyholders. Insurers paid 4.5% less on average in hospital benefits per policyholder in 2021-22 compared to the year before. The average amount paid out for extras benefits decreased by 5.4% per policyholder. A