The ACCC says private health insurers have continued to return profits gained during the pandemic but ongoing restrictions in some states delayed their full return in 2020-21.
The regulator has made the statement in its latest report to the Senate. It is required to provide the annual report under a Senate order.
It says government-imposed pandemic restrictions have continued to limit policyholders’ access to non-urgent elective surgery and non-urgent ‘extras’ treatments.
"This impact was particularly notable in Victoria, which experienced several local lockdowns during the reporting period, and was also evident to a lesser extent in NSW," it says.
“The ACCC is aware that many insurers have been implementing their commitments to return profits from COVID-19 restrictions to policyholders, primarily through premium credits or direct payments to policyholders, and we support these efforts,” said ACCC Deputy Chair Delia Rickard.
However, the regulator said it is "concerned" that some insurers are calculating their total profitability from COVID restrictions too conservatively, by reference only to the value of their ‘deferred claims liability’.
The deferred claims liability refers to money the Australian Prudential Regulation Authority directed insurers to set aside to ensure they have adequate capital to meet the cost of procedures that were deferred as a result of pandemic restrictions.
“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,” said Ms Rickard.
The regulator said, "The ACCC notes that insurers can exclude the value of claims that were missed due to COVID restrictions and are not expected to materialise later (e.g. dental ‘clean and scale’ services) when calculating their deferred claims liability. However, for the purpose of fulfilling their broader commitments made in 2020 not to financially benefit from the pandemic, the ACCC expects insurers to include the value of these claims when calculating their policyholder relief. "
Ms Rickard continued, “We expect insurers to return all benefits from procedures that were not performed and are not expected to be performed later. This may be particularly applicable to extras treatment and geographic areas that were subject to extended lockdowns.
“We will continue to monitor the actions of insurers to return all profits made due to COVID‑19 to policyholders as they promised and report on it in our next annual report on the private health insurance industry.”
The ACCC report says the proportion of Australians with health insurance has increased for the first time since 2015. This has been attributed to increased community focus on health due to COVID-19.
In June 2021, nearly 14 million Australians or approximately 54.3 per cent of the population, had some form of private health insurance, an increase of 1.4 per cent since June 2020.