Medibank Private to hand $105m back to customers

Two million Medibank policyholders are set to benefit from the handback of money saved as the pandemic limited claims.

Medibank will return $105m to customers in the form of premium relief. Picture: supplied.

Medibank will return more than $100m in Covid-19 savings to customers as part of its pandemic financial relief package, with two million policyholders set to benefit.

In a statement issued on Tuesday, the private health insurer said it would hand back around $105m in net claims savings to Medibank and ahm customers who held hospital and/or extras cover in the 2021 financial year.

The premium relief will see up to $52 returned for extras-only policies and up to $175 returned for hospital and extras policies. On average it works out to be $25 for extras only policies and $60 for hospital and extras policies, the insurer said.

The premium relief will be applied to policies automatically by the end of September this year and will be funded through a partial release of the Covid-19 deferred claims liability as at 30 June 2021, as well as permanent claims savings since 31 December 2020.

The return of claims savings was in recognition that Covid-19 restrictions limited how customers could use their health insurance, Medibank CEO David Koczkar said.

“We said right from the start of the pandemic that we would not profit from COVID-19, and that we were committed to returning any COVID-19 savings back to our customers because it is the right thing to do.

“Private health insurers have been required by the industry regulator to hold funds in order to be able to pay for an anticipated catch up in elective surgeries after COVID-19 restrictions were lifted. With the majority of claims normalising we have been able to allocate the excess funding to be returned to our customers.”

Covid-19 is not expected to impact Medibank’s operating earnings for the financial year ending 30 June 2021 and the insurer will continue to assess known claims savings and return any additional savings back to customers, Mr Koczkar said.

Medibank has already provided $195m in Covid-19 support to policyholders, including a financial hardship support package and postponement of premium increases for six months valued at $185m. Its latest measure brings its total pandemic financial relief measures to $300m.

In the first half of the financial year, Medibank recorded its first six-monthly policyholder growth since 2013, adding 49,000 new policyholders to its books, including 17,600 to the Medibank brand. These new policyholders will be eligible for the Covid-19 premium relief.

Mr Koczkar, who recently took over from outgoing CEO Craig Drummond, last month said the private health insurer needed to ensure its policies reflected changing consumer preferences while making its offering more affordable.

“The majority of the population in Australia, which includes 3.5 million of our Medibank and AHM members, have a diagnosed health issue, underlying health risk,” he said.

“Our opportunity is to play a role to ensure our customers have more choices for their health and wellbeing to offer them support to navigate the health system and support them with preventative healthcare options.”

Stepping into the top job, he said he would stick with Medibank’s strategy of acquiring strategic stakes in hospitals as it aims to stamp out out-of-pocket costs and make private healthcare more affordable.