Insurers clinging to profits shamed as small firm offers second refund on medical cover

Linda J. Dodson

Insurers holding tight to profits from medical cover they could not provide during the coronavirus crisis have been put to shame, consumer advocates have said, after a small rival announced it was offering its second refund to affected policyholders. 

WPA, a not-for-profit insurer, is returning almost £4m to customers to make up for the suspension of virtually all private healthcare services during lockdown, as the independent sector stepped in to support the NHS in the fight against Covid-19.

It follows a similar rebate of around £3.7m made to customers in April, with policyholders receiving roughly 40pc of their monthly premiums. This would add up to around £35 for an average 40-year-old with comprehensive cover living in the south of the country.

Despite promises they would not profit from the pandemic, none of the major medical insurance providers has followed suit. 

Due to a dearth of claims between April and May, when private healthcare providers were permitted to offer only urgent cancer treatments, as well as some basic services such as online and video conferencing check-ups, insurers have raked in vast sums as monthly premiums have continued to roll in regardless. 

Most said they would return the undue profits but customers would have to wait until 2022 before they would get anything back in some cases. They said this was because they expected to have to payout for a backlog of claims which were previously delayed.

It means it could be years before insurers are able to implement an independent audit of their accounts to determine how much they made during the crisis and what sums should be returned to customers. 

Gareth Shaw of consumer firm Which? said if firms delayed further it would only show them up against rivals who had been quicker to pay out. 

“The regulator has told firms to take action to help their customers if they can’t provide value for money. For a number of health insurance customers this is proving to be the case.

“All insurers should be acting more quickly to address this issue, as those who treat their customers fairly now may see that they are rewarded for this approach in the future,” he said.

The delay is in contrast to other forms of cover, such as car insurance, where insurers including Admiral and LV have already paid out rebates on premiums. This followed reports suggesting that firms were making savings of more than £1bn due to fewer cars being on the road in lockdown and the subsequent fall in claims.

In May this newspaper reported how medical cover providers had even started to ask customers to pay more as their policies came up for annual renewal, leading to speculation they were preparing to renege on their refund pledges. 

WPA said it could pay out as it was not hampered by the demands of shareholders motivated by profit. 

Aviva, Axa, Bupa, Saga and Vitality have all insisted they will not profit from the crisis and have said they are monitoring the situation to assess when and how to hand back excess savings to customers.  

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