Medibank lifts customer cashbacks to a healthy $305m as claims growth eases

Health insurer Medibank Private (ASX: MPL) has upped its cashback payments to customers to $305 million in FY24 following lower-than-expected claims for medical services over the past year in another extension of the group’s post-COVID relief package.

The figure is up from $215 million announced by Medibank in February for customers, including those of its low-cost subsidiary ahm.

The latest announcement brings Medibank Private’s total support package to $1.46 billion since the start of the pandemic – a move that was initially triggered by a sharp drop in hospital and extras claims by customers from disruptions to elective medical procedures during COVID.

Medibank, which says the cashback program furthers its commitment to not profit from the pandemic, reported two weeks ago that expected claims growth in FY24 would be lower than expected.

The company is targeting claims growth per policy unit this financial year to land at the lower end of the forecast range of 2.2 per cent to 2.4 per cent.

As a result, Medibank customers will receive cashbacks totalling $235 million this year, while ahm customers will be paid back $55 million. For ahm's customers, the cashback is is in addition to the rollover of most extras limits, valued at up to $15 million, which was extended for a third year in a row earlier this year.

Medibank Private’s chief customer officer Milosh Milisavljevic says the total relief package for Medibank Private customers now stands at $305 million in FY24 which he says is aimed at providing households with some cost-of-living relief.

“The top-up will bring Medibank’s total support for customers through our COVID give back program to $1.46 billion, the largest of any health insurer in Australia to date,” he says.

Eligible Medibank customers will receive a minimum cashback of $100, while some will get up to $360 depending on their level of cover. This will equate to an average cashback of $100 for extras-only policies and about $185 for combined hospital and extras policies.

Ahm customers will get $100 back in addition to the extras rollover.

Those Medibank customers holding a hospital and/or extras policy on 30 June 2024 will be eligible for the cashback offer, while ahm customers will be eligible from 30 September 2024.

“We made a commitment at the start of COVID that we would not profit from the pandemic, and we’ve continued to stick by that promise,” says Milisavljevic.

“COVID hospitalisations and other impacts continue to contribute to claims being lower than expected. This is why we are topping up our current give back commitment to $305 million.

“Eligible Medibank customers will receive at least $100 per policy in their bank account in September 2024, with some receiving up to $360.

“Eligible ahm customers will receive $100 per policy in their bank account in October 2024.”

In the latest half year, Medibank Private posted a net profit after tax (NPAT) of $343.2 million, up 103 per cent from a year earlier, although underlying NPAT was just 16.3 per cent higher at $262.5 million.