Health insurers promise refunds, then raise prices

Firms pledged not to profit from medical cover they could not provide, but are now charging more, writes Harry Brennan

Insurers are charging higher premiums to renew medical cover they have not been able to provide thanks to the Covid-19 pandemic, causing concerns they will renege on promises not to attempt to profit from the crisis.

Policyholders have continued to pay premiums throughout the pandemic. Insurers insist they still plan to return any profit made as a result of epidemic, during which the private healthcare sector has been requisitioned to support the NHS and services have been unavailable. This means firms are paying out significantly fewer claims, yet none of the major providers has refunded or discounted premiums.

Edward Carter, 72, was shocked when he received a letter at his Warwickshire home from his insurer, Bupa. It said the premium on his wife’s private medical care policy was due to rise by 24pc from £4,905 a year to £6,412.

The average cost of private medical cover is £2,272.

The letter containing the renewal quote, seen by Telegraph Money, made no mention of any form of rebate and Mr Carter said he suspected the insurer was trying to “bury its promises”.

He said: “It makes me think they are just waiting to renege on their commitment not to profit from Covid-19. I feel that the company will forget the whole thing, given time.”

He added that he had made a formal complaint to Bupa after failing to secure a refund for the two months of premiums paid in April and May, when private healthcare providers were offering only urgent cancer treatments and some basic services such as online and video conferencing check-ups.

Bupa and other insurers said they expect a surge in pent-up claims as hospitals begin to return to normal and pre-Covid levels of private services resume in the next few weeks.

As a result they are unwilling to offer refunds yet, to ensure that they have enough funds to be able to cover the cost of the backlog. Customers may have to wait months and in some cases years while firms monitor the situation or until they audit their books at the end of the financial year to see what, if anything, can be handed back.

Many policyholders cannot afford to cancel their cover in the meantime because of the risk that taking out a new policy later on would be much more expensive, especially if they have pre-existing conditions.

Bupa said: “As an organisation without any shareholders, our customers come first and we are committed to doing the right thing. We have pledged to pass back any exceptional financial benefit ultimately arising as a result of Covid-19 to our health insurance customers. This will be by rebate or other appropriate means. We will update our customers on how we intend to do this as the situation becomes clearer.”

A spokesman for Aviva, another insurer, said the way it calculated premiums was unaffected by the Covid-19 pandemic. It acknowledged that some customers might be asked to pay more for their cover at renewal.

Axa said: “When the crisis is over, we expect to pay many more claims than usual as members catch up on their delayed treatment and we need to be in a position to settle them.

“We are not ‘freezing’ premiums; however, if the value of our health insurance claims in 2020 and 2021 combined falls because of the crisis, we’ll pass back to our customers the difference compared with 2019.”

It said it expected to be able to pay out any refunds due by March 2022.

Saga’s spokesman said: “We’ve said from early on that we’re committed to a coronavirus promise whereby exceptional profits that may arise from Covid-19 are returned to our customers. The coronavirus pandemic is ongoing though and we need to wait longer until we can start to make this assessment for customers.

“If anyone does face an increase in renewal prices in this period, then of course we’ll consider how to address that as part of our coronavirus promise in the coming months.”

Vitality said any changes in its premiums would fairly reflect claims levels both before and during the pandemic.

‘They are just waiting to renege on their promise not to profit from coronavirus’