Bupa is scrapping a further £59m Covid rebate for its UK customers as the private medical insurance (PMI) provider said deferred claims from the pandemic are starting to appear.
It completed an initial £125m rebate for customers after the affects of the Covid pandemic on private healthcare provision in June 2021.
The insurer also noted its UK operation added more than 250,000 net customers across PMI, health trusts, dental and cash plans in the first six months of 2023, taking its total membership to 3.3 million.
However, its international PMI business Bupa Global lost almost 100,000 customers during the period, the second consecutive year of major falls, taking it to 364,000 insured lives.
At the end of 2021 it held 510,000 IPMI customers but that fell to 460,000 at the end of 2022 and has continued to drop as the insurer has continued its turnaround, noting it had returned to profitability.
No further UK Covid rebate
The figures were published in Bupa’s interim results for the first half of 2023 which showed underlying profit in the Bupa UK and Global division doubling to £140m during the six-month period compared to last year.
Revenue grew by 10% to £2.06bn driven by higher customer volumes in insurance, noting that the underlying profit increase was driven by revenue growth, higher investment returns and the Bupa Global rebound.
The insurer also revealed its decision not to complete a second Covid refund, which had previously been earmarked to potentially reach £71m, as it was seeing deferred claims presenting and expected this to continue into next year.
“UK Insurance profit was temporarily increased by the release of the return of premium provision (£59m) in response to deferred claims costs, a significant proportion of which are now expected to arise later in 2023 and into 2024 following evidence of increased deferred claims in the first half of 2023,” it said.
Explaining why it had identified the increased claims as Covid-related, Bupa told Health & Protection: “We know that some treatments were delayed during the pandemic such as musculoskeletal surgery, and we are now seeing these catch up again.
“We’re also seeing later stage cancer cases emerging which need higher levels of treatment. In line with our Cancer Promise, we’re helping customers access the care they need which includes the very latest drugs and treatment.”
It added: “Claims were higher than expected in the first half of the year from our renewing customers.
“This has increased our assessment of the total deferred claims rebound and resulted in a release of the provision.
“This covers the additional deferred claims that we have seen this so far year, as well as those expected to arise later in 2023 and into 2024.”
However, it did not rule out a potential rebate should the deferred claims not continue as expected, saying: “We will continue to monitor how claims evolve and act accordingly.”
Global and dental
With regard to the fall in customers at Bupa Global, the insurer told Health & Protection the majority of the decrease was due to travel insurance policies ending following the decision in 2021 to exit that market.
“We continue to be encouraged by the overall performance in Bupa Global, including strong growth in customer volumes for our continuing IPMI business in the first half of 2023,” it said.
In the results it added: “In Bupa Global revenue and profit improved driven by increased customer volumes in our continuing businesses and strong corporate revenue performance.
“Under the new regional commercial structure, we continue to make strong progress against targets to deliver long-term sustainable growth.
“We are achieving this by responding to the distinct needs of our customers and people across global locations, with a focus on maximising efficiency in our operating model, improving systems and digital support for our customers.”
Bupa also said its UK Dental underlying losses had reduced as its turnaround strategy had begun, following a £646m write-down in its annual results for 2022.
In March the insurer slashed dental services announcing it was closing, merging or selling 85 practices across the country, blaming a lack of dentists to deliver NHS care and higher running costs.
Australia Covid rebate
Overall, Bupa reported a pre-tax profit of £241m across its worldwide operations – up 5% from £231m at the same point last year, driven by favourable movements in non-underlying items.
It noted underlying profit before tax was down 22% to £254m, principally driven by Australian health insurance where it issued a £231m Covid rebate to customers and it returned to more normal operating after experiencing lower claims and higher margins due to Covid in 2022.
In all, Bupa said it had four million more health insurance customers than a year ago.
Elsewhere in Asia Pacific, revenue increased in Hong Kong due to volume growth in Health Services and insurance premium re-pricing.
However, underlying losses increased due to higher insurance claims following the relaxing of Covid-19 mandates.
These combined pressures dropped profit in the region down 84% to £41m from £255m.
Europe and Latin America
Underlying profit in the Europe and Latin America division more than doubled to £145m from £71m as margins improved, with revenue growing by £350m through “strong customer growth” and increasing prices to match inflation.
Bupa Global Latin America, which provides international health insurance and local health insurance in Latin America, increased its membership to 85,000 from 68,000 a year earlier.
The insurer said revenue increased in this arm due to higher volumes in the domestic health insurance market in Ecuador and higher price increases across the region.
Bupa Group CEO Iñaki Ereño said the results reflected continuing good organic growth across its health insurance businesses, increased activity in health provision businesses to meet growing customer demand and improving occupancy rates in aged care.
“We continue to be encouraged by the overall performance of the group as we become an increasingly digital business while navigating market challenges,” he said.
He added: “There is much to do, but we are well positioned to meet our customers’ healthcare needs. We also remain focused on our purpose, as we support wider communities where we can while tackling environmental issues.”
