Medibank CEO joins pushback against claim of pandemic windfall

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Medibank CEO Craig Drummond says any claim insurers have profited from the COVID-19 pandemic belies the reality of a highly challenging environment.

Writing in an opinion piece, Mr Drummond said 2020 has been a "tough year for everyone" and it seems unlikely to get easier any time soon.

The Medibank boss dismissed claims private health insurers have enjoyed a 'billion-dollar windfall' as a result of the shutdown in elective surgery and restrictions on other health services as a result of the pandemic.

"I’m the chief executive of Medibank and I see the impact this is having on our 3.7 million customers and the health teams across our business. I also see the impact on healthcare providers. Hospitals, dentists, physios and their frontline people – to name just a few – have all felt the pain of COVID-19," said Mr Drummond.

"We determined right from the beginning that our customers would not be financially disadvantaged by the changes that have had to happen. And that’s why the industry immediately postponed premium increases for six months and has now returned more than half a billion dollars in savings to our customers.

"Any suggestion of a billion-dollar industry windfall from the six-week shutdown ignores not only this, but also what happened to claims during and since this time.

"It is true we saw a decrease in claims over the six weeks, particularly in extras. Hospital claims also fell, although many elective surgeries were unaffected by the government’s restrictions. In total, claims were around 50% of normal levels.

"But since then, claims have bounced back to normal or above-normal levels. The industry regulator APRA recognises this ‘catch up’ and has told insurers to expect the majority – if not all – of surgeries and extras services disrupted through COVID-19 to ultimately take place."

Mr Drummond said these delayed claims will also be subject to the impact of health inflation.

"What we’re seeing now in Victoria is that the situation is fluid. If it turns out there are more savings, we will return these to customers. Our promise to not benefit financially from the pandemic is on the public record and we aren’t about to walk away from this," he added.