Big health insurers ‘should pay back deferred claims’

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Major private health insurance companies should follow the lead of HBF and reimburse policyholders for claims deferred during the COVID-19 pandemic, says Australian Private Hospitals Association (APHA) CEO Michael Roff.

HBF, the country’s fifth-largest health insurer, expects to pay back around $40 million to eligible current and former members holding a hospital and/or extras policy during the period 23 March 2020 to 30 June 2020.

It said that would involve nearly 500,000 policies, with payments to be between $31 and $140 for each cover held.

Mr Roff praised HBF’s move as “the right thing to do”, but noted it was restricted to the Western Australia-based insurer. 

“This is exactly what health insurers should be doing – in fact we have called for this previously,” he said.

The latest Australian Prudential Regulation Authority (APRA) data report showed insurers held $1.8 billion as deferred claims liability due to disrupted services – such as elective surgery procedures – during the pandemic. 

“If those funds are not used to address the backlog of elective surgery, then they should be returned to members,” Mr Roff said.  

“HBF is in a position to return $40 million to policyholders, so imagine what the large insurers are holding back? For example, Medibank reported last week they are holding $310 million in deferred claims.”

Medibank also announced a $255 million operating profit for its health insurance business in the first six months of the 2021 financial year, up 13 percent. 

However, it did not state any plans to reimburse policyholders, only saying: “Any permanent net claims savings due to COVID will be given back to our customers through additional customer support in the future.”

Activity in private hospitals across Australia was down 6.9 percent in 2020 compared to 2019, but Mr Roff said this was better than what had been expected when elective surgery restrictions were first imposed.  

“It is likely all health funds are holding an excess of deferred claims liabilities,” he added. 

“The latest data shows that in the six months to December 2020, private hospital activity bounced back to more normal levels, so there is no reason why all health funds can’t declare how much they will return to members.”  

Mr Roff was pleased to see at least one health insurer honouring its promise to members – HBF is also cancelling all premium increases between 31 March 2020 to 1 April 2021, saving policyholders $37 million – and he looked forward to the industry's major players making similar announcements.  

“Australians have been hit hard by the pandemic and many will be facing a cut to JobKeeper at the end of this month,” he said. 

“If private health insurers are holding on to money that could help those people out, they should do the right thing and follow HBF’s great example.” 

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