The latest report from the prudential regulator shows private health insurers endured a difficult June quarter with a decline in premium revenue but increase in claims.
The report from the Australian Prudential Regulation Authority (APRA) has revealed the impact of the COVID-19 pandemic on the health insurance sector for the three months from April to June.
"The June quarter result was impacted by the health and societal measures introduced as a result of COVID-19, and the weaker investment performance caused by the initial COVID-19 driven market volatility contributed to a softer year to June result," said APRA.
The report shows a 1.4 per cent reduction in premium revenue but a 2 per cent increase in claims. Management expenses also increased to 15.8 per cent but there was an overall 0.4 per cent decline in net margin - the lowest in at least the last 12 years.
Membership declined while net profit after tax fell 45 per cent compared to the corresponding period in 2019.
Insurers responded to the pandemic by deferring the approved 1 April premium increase and providing a range of support mechanisms to customers, including financial hardship provisions.
CEO of Private Healthcare Australia, Dr Rachel David, said the APRA data puts to rest any suggestion health funds made ‘windfall gains’ as a result of COVID-19 restrictions.
“No industry sector is immune to the impact of the COVID-19 pandemic. This is a timely reminder that we must bring costs down to keep premiums affordable. The only way to do this is by addressing waste in the system, tackling the inflated pricing of medical devices, removing red tape to allow insurers to fund more care out of hospital will also reduce costs.”
Dr David continued, “Today’s APRA data shows the impact COVID-19 has had on savings were modest and, in fact, health funds have either returned any savings to consumers already or are using them to fund the backlog of elective surgery.
“APRA has made it clear that health funds must retain enough capital to fund this backlog of elective surgeries and the additional healthcare needs of private patients.
“It’s important to remember that surgeries were postponed, not cancelled, and health insurers are now working with hospitals and doctors to safely and efficiency perform these surgeries."