Britain’s largest private medical insurance (PMI) provider has broken an almost sector-wide silence to explain how it is going to deal with claims during and after the coronavirus crisis.
Bupa said that “any exceptional financial benefit ultimately arising from COVID-19 will be passed back to our health insurance customers.
“This will be by rebate or other appropriate means.”
That suggests that the provider will not enjoy a profit from premium income paid when access to care is not possible and that it will consider rebates or alternatives on a case by case basis.
The statement also suggests that the provider believes its modelling is robust and flexible enough to anticipate a relatively broad range of claims scenarios, albeit on a discretionary basis.
Bupa’s statement comes after private hospital operators across the country pledged all of their capacity in the national effort against COVID-19.
Their commitment means that almost all individuals with PMI, either bought independently or supplied through their employer, or those who are willing to self-pay, are going to have to wait weeks – or months – until the virus is brought under control and they can receive inpatient care privately.
“As an organisation without any shareholders our customers come first. At this point, no one can predict the full impact of this national crisis and we do not have all the answers yet. But we want to reassure our customers that we will do the right thing for them, and that any exceptional financial benefit ultimately arising from COVID-19 will be passed back to our health insurance customers. This will be by rebate or other appropriate means.“
Alex Perry, CEO, Bupa Insurance
A senior broker contacted by Health Insurance & Protection said that some routine private treatment is still taking place at some facilities outside of London – but he added that capacity in the capital is almost non-existent and he expects independent sector hospitals in Britain’s other main cities and elsewhere to become completely closed to private business almost immediately as well.
While insurers are likely to come under increasing pressure to offer some kind of compensation to clients who are unable to use the core element of their cover during that current lockdown, the industry – and perhaps, easier said than done, its customers – will also have to keep in mind solvency requirements.
On top of that, the administrative headache and moral hazard that lie ahead for insurers are far from straightforward.
Stuart Scullion, executive chairman of the Association of Medical Insurers & Intermediaries, told the Health Insurance & Protection LinkedIn group (you can join it here) that the intermediary market is “holding its collective breath” waiting to hear what support insurers may provide for clients suffering financial stress as a result of the COVID-19 pandemic
He said: “As an industry we need the others to follow Bupa’s lead in announcing what that support might look like.
“As things stand, PMI providers will face negligible claims outgoings over the coming weeks while independent and private sector hospitals stop accepting private patients as they support the NHS against COVID-19.”
But increasingly, individual and corporate customers are asking insurers and brokers to justify their PMI spend, when they are unable to – in the vast majority of cases – use it to access inpatient private care.
However, Alex Perry, CEO of Bupa Insurance, said: “At this point, no one can predict the full impact of this national crisis and we do not have all the answers yet.
“But we want to reassure our customers that we will do the right thing for them, and that any exceptional financial benefit ultimately arising from COVID-19 will be passed back to our health insurance customers.
“This will be by rebate or other appropriate means.”
Brokers contacted by Health Insurance & Protection welcomed the statement of intent, but suggested that numbers are still being crunched and different potential outcomes will be sketched out as the COVID-19 picture changes every day.
Bupa’s statement also comes several days after another insurer, WPA, wrote to members to explain that it “is providing options for customers in financial difficulty to maintain their policy and protect their underwriting”.
The majority of other providers have said simply that they expect access to most private care to be delayed and they will register claims and fund treatment when it becomes available.
But Bupa’s statement appears to suggest that it believes there may be some flexibility in special circumstances for potential solutions, including payment holidays or rebates.
As insurers begin to show their hand in the coming days and weeks – more are expected to do so now that the market leader has spoken out – their semantics are likely to be nuanced, if nothing else.
But the conundrum – outlined by the statements from both Bupa and WPA – means that there will be an administrative headache for providers whatever happens, as they try to balance cash flow, while managing existing and forthcoming claims, as well as new business and renewals – and sorting out broker commission.
Speculation continues over the prospect of potential commission freezes or clawbacks as insurers keep options like payment holidays or rebates on the table.
Insurers will also have to balance that short-term claims spend in the weeks ahead with an inevitable – and undoubtedly significant – spike later in the year and into 2021, as members in the private queue eventually get their turn for treatment.
Either way, for brokers, the weeks ahead will see testing conversations with clients as they try to convince them to stay on deck and not cancel cover and dump favourable underwriting terms overboard.
Responsible brokers will also have to deal with the bittersweet headache of taking – or not – new business on.
Bupa said it will commission a third-party review “to ensure that what it does is fair and reasonable across its different customer groups”.
Like other providers, Bupa is reminding customers that they have access to a range of different services over and above hospital treatment.
A spokesman for Bupa said: “Services include telephone and video consultations with nurses, GPs and consultants, as well as specialist help for physiotherapy and mental health, right through to chemotherapy at home for cancer patients.”
The spokesman said that Bupa has already seen calls to its AnyTime HealthLine “more than double”.
The Digital GP service that Bupa provides in partnership with Babylon is also being made available to all insurance customers with a new COVID care assistant feature.
Regular COVID-19 updates on both domestic and international PMI and protection will follow on healthinsuranceandprotection.com in the days to come.