Bupa has increased its potential policyholder rebate to £71m and revealed a dip in profits at its UK and Global business after a resurgence in claims last year, while adding 135,000 new customers.
The insurer paid an initial £125m rebate to customers in March 2021 following the temporary disruption to some medical treatments in 2020 from the pandemic.
It further pledged to pass back any exceptional financial benefit ultimately arising because of Covid-19 to its UK health insurance customers, earmarking a £44m fund midway through 2021.
This has now been extended to £71m which the insurer said is its best estimate of exceptional financial benefits occurring from 23 March 2020 to 31 December 2021.
“We are yet to determine a final settlement as we continue to monitor claim patterns and, as at 31 December 2021, we continue to hold a premium provision of £71m,” Bupa said.
In its combined UK and Global business, Bupa revealed revenue was up 10% to £3.4bn as it added 135,000 new UK private medical insurance (PMI), dental and cash plan customers.
However, underlying profit was down 44% to £62m driven by increasing claims compared to 2020 as customers were able to access private healthcare more easily.
“This was exacerbated in Bupa Global, our international PMI business, where pricing of experience-rated products referencing the lower claims seen in 2020 led to reduced profitability,” Bupa said.
The insurer also saw lower new business volumes in its IPMI offering but said this was partially offset by strong retention.
Asia Pacific boosts profits
Overall, the multi-national insurer reported a 7% increase in profits to £423m, up from £396m in 2020, which reflecting higher underlying profit, and gains made on acquisitions and divestments.
Revenue for the group was also up 8% to £12.9bn from £12bn the previous year.
“In health insurance, a strong increase in customer numbers, particularly in the Europe and Latin America Market Unit, increased revenue from 2020,” Bupa said.
“This was offset by increased claims levels in some markets as there was reduced disruption from the pandemic compared to 2020.
“We were particularly pleased with the growth in customer numbers in our health insurance businesses in Spain and Turkey, as well as in the UK.”
In Europe and Latin America, Bupa reported revenue growth of 12% to £4bn but again profit dipped 7% to £162m from increased claims as disruption to elective procedures was reduced.
It also noted challenges in its Chilean Isapre insurance business, where performance was affected by regulatory interventions impacting the whole sector, with further regulatory and political impacts anticipated.
Meanwhile, in Asia Pacific underlying profit soared 69% to £222m following a revenue increase of 4% to £5.5bn.
Bupa said this was mainly driven by volume growth across its businesses and not repeating a delayed premium increase for Australian Health Insurance customers which was implemented in 2020.
Underlying profit was also down 12% to £45m in its other businesses largely due to higher claims in Saudi Arabia and the additional Covid-19 coverage and claims in India.
‘Pandemic not yet over’
The insurer highlighted that it was still dealing with the pandemic.
“Although several of our markets have reached the advanced stages of vaccine deployment, we are still navigating the medium to long-term impact of Covid-19 in all our business lines,” it said.
“As restrictions are increasingly being lifted across the world, the vaccine rollout is progressing steadily, and economic activity is accelerating, we are positive about our future prospects.
“We know that the pandemic is not yet over and that conditions in some markets remain challenging, with the recruitment of healthcare workers an ongoing sector-wide issue, and with rising inflation increasing costs for our businesses.”
The also insurer noted that it was seeing major shifts in customer expectations and engagement, which have been accelerated by the pandemic, particularly in digital healthcare.
Group CEO Iñaki Ereño said: “Our 2021 results reflect the underlying strength of Bupa, with strong customer growth in several of our health insurance markets and activity in health provision returning to normal.
“I see transformation as our route to growth and it is at the heart of our new plans. As restrictions ease, we will build on Bupa’s strong platform and I’m confident that our new strategy will position us in the best way for success into the future.”