Medibank has announced a strong result for the financial year 2021 with an increase in earnings and the number of policyholders.
The company also reported a more than $70 million reduction in its deferred claims liability.
The prudential regulator instructed private health insurers to set aside funding for claims deferred as a result of the halt in elective surgery during the early period of the pandemic.
The sector's accumulated deferred claims liability topped $1.7 billion but is gradually being returned to members in the form of claims or reduced premiums.
"The decrease in the COVID-19 deferred claims liability from $297.1 million to $223.8 million was largely the result of the reduction in our aggregate hospital deferral assumption to 59%," said Medibank in its annual result.
The company reported a 2.1 per cent increase in premium revenue to $6.68 billion and a 39.8 per cent rise in net profit after tax to $441.2 million. It paid $5.6 billion in claims. Net investment income recovered to $120 million.
Medibank recorded an 82,500 increase in policyholders.
"When adjusted for COVID-related suspensions, policyholders increased by 3.5% with the Medibank and ahm brands growing 1.3% and 10.9% respectively," said the company.
"Our acquisition rate improved by 110 basis points, largely driven by strong growth in the new to industry customer segment within the Medibank brand. Our retention rate improved by 130 basis points at a fund level, reflecting improving customer advocacy across both brands, increasing product value and differentiation in the Medibank brand."
“We have delivered a high-quality result underpinned by strong policyholder growth across both brands, our highest ever customer advocacy, growth in Medibank Health, and ongoing focus on management expenses," said CEO David Koczkar.
“This result is a clear demonstration that focusing on our customers’ needs and being disciplined in how we run our business delivers strong results."
Mr Koczkar continued, "We’ve been there for our customers through COVID, providing around $300 million in support to date, the largest support package in our 45-year history. This includes $103 million in COVID permanent net claims savings we are returning to our customers in premium relief. We will continue to assess known claims savings and will return any permanent net claims savings due to COVID to our customers through additional support in the future.
“Our Medibank Health business continued to grow with COVID driving demand for in-home care and telehealth, the expansion of our short-stay program and the launch of My Home Hospital as well as the growth of our preventative health programs.
“Our people are engaged, inspired by our vision and purpose and optimistic about our future."
Mr Koczkar said the company expects overall participation growth to slow and that it plans to "further strengthen" its dual-brand strategy - Medibank and ahm.
“We know our customers want greater choice about where they can receive care and greater control over what they pay for it.
“We also have a critical role to play in driving change in Australia’s healthcare system and advocating for reforms to improve the affordability and value of private healthcare.
“This is why we will continue to invest in preventative health and building more partnerships with doctors, hospitals and governments. However, these changes will not come quickly nor will it be easy, but the sustainability of our health system is at stake,” added Mr Koczkar.