The Australian Competition and Consumer Commission (ACCC) has reminded health insurance funds of their commitment not to profit from the pandemic and to issue fair refunds to their customers.
The reminder follows the release of the ACCC’s Annual Report into the private health insurance industry, Report to the Senate: On anti-competitive and other practices by health insurers and providers in relation to private health insurance, which found that ongoing restrictions in some States delayed the full return of these profits in 2020-21.
Deputy Chair of the ACCC, Delia Rickard said many insurers implemented their commitments to return profits from COVID-19 restrictions to policyholders.
“However, the ACCC is concerned some of the statements made by insurers when announcing relief for policyholders may suggest that they are calculating their total profitability from COVID restrictions too conservatively, by reference only to the value of their ‘deferred claims liability’,” Ms Rickard said.
“The deferred claims liability refers to money that financial regulators directed insurers to set aside to ensure they will have adequate capital to meet the cost of procedures that were deferred as a result of COVID-19 restrictions,” she said.
“The deferred claims liability is not a proxy for total profitability from COVID restrictions, and nor was this ever the intention when financial regulators directed insurers to create a deferred claims liability.”
Ms Rickard said the ACCC expected insurers to include the value of claims that were missed due to COVID restrictions and were not expected to materialise later (e.g. dental ‘clean and scale’ services) when calculating their policyholder relief.
“We expect insurers to return all benefits from procedures that were not performed and are not expected to be performed later,” she said.
“This may be particularly applicable to extras treatment and geographic areas that were subject to extended lockdowns.”
Ms Rickard said the ACCC would continue to monitor the actions of insurers to return all COVID-19 profits to policy holders and would report on it in its next Annual Report on the private health insurance industry.
The ACCC’s 29-page 2020-2021 Annual Report can be accessed at this PS News link.
