HBF returning surplus funds from pandemic to members

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Australia’s fifth-largest health insurer HBF has announced it will return $40 million in an unutilised COVID-19 deferred claims provision to members.

The insurer, which is based in Western Australia, said this return to members reflects its commitment to not financially benefit from the pandemic.

"In its accounts for the financial year ended 30 June 2020, HBF estimated a deferred claims provision totalling $94.3 million relating to elective surgery procedures and ancillary services members could not access while COVID-19 control measures were in place but were expected to be claimed at a later date," it said in a statement.

HBF said since July last year, it has experienced an increase in claims and utilised the deferred claims provision accordingly. However, with claims now normalising, it expects an unutilised amount of approximately $40 million.

It said this amount should be available to pay to eligible current and former HBF members holding an eligible policy during the period 23 March 2020 to 30 June 2020.

"Initial estimates are that almost half a million policies will be eligible, which would result in a payment per policy of between $31 (Extras only) and $140 per policy (Hospital and Extras), subject to regulatory approval," it said, adding it will provide an update after the final amount is determined by HBF’s Appointed Actuary as at 31 March 2021.

HBF CEO John Van Der Wielen said, “HBF is honouring its promise made to members last year that they would be the beneficiaries of any surplus funds arising from the COVID-19 pandemic.

“When elective surgery and ancillary services became available again, particularly in WA where the majority of our members reside, we saw an increase in claims but not the surge we had anticipated. With claim levels now normalising, it is clear a meaningful portion of the deferred claims provision will not be utilised and we are committed to returning those funds to members.

“We are working through the details but our principle is for a fair and simple approach to this distribution, with funds paid directly to eligible HBF Hospital and Extras policyholders.

“This decision aligns with our values as a not-for-profit health insurer committed to putting members first and doing the right thing, and is on top of our 12-month premium cancellation and hardship measures implemented in response to COVID-19.”

The Australian Private Hospitals Association (APHA) welcomed HBF's move and encouraged other private health insurers to match its decision.

“This is exactly what health insurers should be doing – in fact we called for this very thing last week. The latest Australian Prudential Regulation Authority (APRA) data report showed there was $1.8 billion sitting in insurers’ bank accounts as deferred claims liability, if those funds are not used to address the backlog of elective surgery, then they should be returned to members," said APHA CEO Michael Roff.