Health insurer refunds premiums for ‘extras’

Health insurer AIA Australia is refunding at least 50 per cent of premiums for its extras policyholders after claims plummeted during the COVID-19 lockdown.

CEO of AIA Australia Damien Mu at the company headquarters in Melbourne. Picture: David Geraghty.

Health insurer AIA Australia is refunding at least 50 per cent of premiums for its extras policyholders after claims plummeted during the COVID-19 lockdown.

AIA is the first insurer to issue refunds, which apply from April 1 to December 31 and are expected to be paid next February.

AIA Health chief executive Damien Mu said singles would receive up to $900, while families were expected to be refunded up to $1800. He said refunds would be calculated depending on the level of policy, less benefits paid during the period.

“During this time we understand there are reasons why people aren’t able to get value from their extras cover due to the restrictions in place and therefore we want to protect that value for customers,” Mr Mu said.

“If they are unable to get the benefit of that cover, we want to get that money back to them some way. We think that’s the right thing to do.”

Mr Mu said extras claims for treatment from health providers such as dentists, optometrists and physiotherapists had begun to rebound, but had not recovered to pre-pandemic levels.

Industry body Private Healthcare Australia said other insurers would consider issuing refunds in coming months when they got an “accurate picture” of how the COVID-19 pandemic had affected claims. “As the government’s ban on elective, essential non-emergency surgery lasted only six weeks, the savings predicted by some have not eventuated for health funds,” PHA executive ­Rachel David said.

“However, the full and accurate picture will be known in a few months’ time when APRA claims data is released. It is at this point that health funds will evaluate their financial position in line with regulatory capital requirements and consider if savings need to be returned to members or if no savings eventuated as a result of COVID-19.”

Dr David said now that all restrictions on surgeries had been removed, health insurers were funding a backlog of procedures.

“Members still receive value from their cover as they have access to timely care in the private system with a doctor of their choice. This compares to the public system that has an up to two-year wait for elective surgery.”

Other health insurers have flagged premium refunds. Last month Medibank chief executive Craig Drummond said the company was considering returning cash to customers from lower claims during the COVID-19 shutdowns, but only after a detailed assessment of whether demand for services and procedures bounced back strongly or the savings were more permanent.

He said the group had postponed premium price rises across its Medibank and ahm brands.