Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Insurance UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (March 5, 2021, 2:10 PM GMT ) Health insurers in Britain and France benefited from handling fewer claims last year because non-emergency medical procedures were canceled amid the coronavirus crisis, but those profits could soon be lost because of increased taxes or premium rebates, Fitch Ratings has said.
The ratings agency said that insurance companies offering health cover in the two countries had largely escaped costs linked to the coronavirus pandemic, with most of the financial burden of care being borne by national health service providers.
"Health insurers made higher profits than usual in France and the U.K. in 2020" because the state bore most of the costs, London-based Fitch said on Thursday. "Health insurers therefore benefited from lower claims due to deferrals and cancelations of elective medical treatments during lockdowns, while not facing significant pandemic-related claims."
That contrasts with countries such as Germany and the Netherlands, where private health cover is broader and costs associated with the coronavirus have effectively been shared by the state and health insurers, Fitch said.
But it added that those profits could be eroded by taxes on the sector, a surge in claims or pressure to pass on savings to policyholders.
The French government announced in September that it was imposing an exceptional tax on the health insurance industry after estimating that a decline in medical appointments had generated €2 billion ($2.4 billion) of savings for the sector during the pandemic.
France said the tax on 2020 profits would raise €1 billion and a further tax on 2021 profits would bring an extra €500 million to state coffers. But the government warned that the €500 million figure could be revised based on the impact of the pandemic on health insurers at the end of the year.
Fitch said it expected the excess profits for U.K. insurers in 2020 to be used "to meet a surge in demand from postponed medical treatments, or passed back to policyholders through premium rebates."
Health insurance giant Bupa said in April 2020 that it would pass on to U.K. customers any exceptional profit from the postponement of elective medical treatment to policyholders in the form of premium rebates.
Bupa said in its 2020 financial results, also published on Thursday, that it has set aside £145 million ($200 million) to refund customers. It added, however, that it expects a rebound in claims this year as treatments that were postponed during the pandemic are rescheduled.
"Postponed claims will return, and the quantum and timing of claims rebound in 2021 remains uncertain," Bupa said. "There is potential for volatility in insurance profits in the coming year."
A spokeswoman for the Association of British Insurers declined to comment on whether other health insurers would also be offering rebates
--Editing by Joe Millis.
--Updated to include a comment from the Association of British Insurers.
For a reprint of this article, please contact reprints@law360.com.
