AIA returns Covid-19 savings, paying $200 health insurance rebates

After APRA ordered health insurers not to bank COVID-19 savings, AIA has begun paying its members average rebates of $200.

AIA Australia chief executive Damien Mu at the company headquarters in Melbourne. Picture: David Geraghty

Health insurer AIA will return millions of dollars to its members via rebates after claims plummeted during lockdowns.

Health insurers have been facing pressure over how to return any surplus funds to members while balancing the need to retain sufficient capital to fund a backlog of claims following reduced demand during COVID-19 restrictions.

AIA has opted for rebates, similar to Perth-based HBF — Australia’s fifth-biggest health insurer, which is returning about $40m to its members.

Meanwhile others are looking at other ways, with NIB confirming it is more likely to pass on savings during its annual premium rise application.

AIA Australia chief executive Damien Mu said the insurer would return about $4m to its members.

It announced last June that it would refund at least 50 per cent of its premiums for its extras policy­holders after its COVID-19 restrictions prevented members accessing health services such as optometry, physiotherapy and dentistry.

Of members who are set to receive a refund, 93 per cent will get an average payment of $200 each.

“It’s really about doing the right thing and giving customers piece of mind that if they took out that cover and were unable to access that cover because of restrictions or concerns around going out to see doctors or physios or dentists because of COVID, then we wanted to assure them that we would refund at least up to 50 per cent their extras premiums,” Mr Mu told The Australian.

“It was to ensure that they continued to receive the right value. It’s really about us demonstrating to the customer that we recognised there were going to be some barriers and if that was the case, we would support them.”

Mr Mu said overall payments ranged from $20 to $2476. This represented an average of 12.5 per cent of an extras premium returned to AIA Health members. The refunds were part of AIA Health’s broader COVID-19 ­response, which includes COVID-19 cover extension, financial hardship measures, Medix and increased health and wellbeing support.

The rebates apply from April 1 to December 31, 2020.

Insurers have also tried a range of initiatives to bolster premium value to reverse the number of younger Australians terminating their policies.

APRA revealed last month that health insurance membership in the 50-plus age group increased by 78,200 people, while membership among those aged 20 to 49 was “more subdued”, rising by 14,639 in the year to December.

Bupa began funding Sam Wood’s online fitness and nutrition program for three months last year, in an effort to entice younger members and create more value amid the COVID-19 restrictions.

Bupa’s health provision business — which includes services such as optical and dental — recorded an underlying loss of $52m in the year to December 31, $29m higher than the previous year. This was despite revenue across its health provision business jumping 18 per cent to $1.98bn, mainly due to a contract with the Australian Defence Force.

“While revenue improved in these businesses, profitability was adversely impacted by pandemic restrictions despite the receipt of JobKeeper financial support for eligible optical and dental employees. This support enabled us to retain jobs and meet community needs for services as lockdown restrictions eased,” Bupa ANZ chief executive Hisham El-­Ansary said.

Overall, Bupa’s ANZ operations firmed 3 per cent to $8.82bn, while profit fell 28 per cent to $211m.

Medibank bucked the trend, signing up 49,000 new policyholders, including 17,600 to the Medibank brand, in the six months to December 31. Overall net profit surged 27.3 per cent to $223.4m on the back of a 0.5 rise in revenue to $3.44bn.

But chief executive Craig Drummond said it was too early to say that the number of people withdrawing from private health insurance had hit its nadir.