Health insurer posts $5.8m surplus despite claims rising
HEALTH insurer Southern Cross has posted a surplus of $5.8 million, but rising claims mean that premiums have also increased.
Claims in the year to the end of June were up by 6.2 per cent on the previous year, due to a combination of more claimants and the higher cost of surgery and other medical procedures.
As a result, premiums rose in total by 6.4 per cent. Some older policy-holders have seen premium hikes of 10 per cent or more.
The continued rise in premiums for older policyholders has led NZ First to put the Affordable Healthcare private member’s bill before Parliament. If voted into law, it would see premium relief for over-65s, and the removal of fringe benefit tax on employerfunded policies.
Nearly one in five New Zealanders has health insurance with Southern Cross, which is a not-for-profit society.
In the year to the end of June, Southern Cross paid $738m in claims covering more than 170,000 surgical procedures, 405,000 specialist consultations, 781,000 GP visits, and 687,000 prescriptions.
Southern Cross Health Society chief executive Peter Tynan said that was ‘‘phenomenal’’ considering that its 811,462 members made up only 61 per cent of the insurance market.
For every dollar received in premiums Southern Cross paid out 90.2 cents in claims, Tynan said. The industry average was 60c in the last financial year.
The surplus reversed a deficit recorded by the insurer in the previous year.
Tynan said the society had worked hard to keep costs down, investing in technology to increase efficiency. Eighty per cent of claims were now made electronically.
The society continues to expand its ‘‘affiliated provider’’ programme, under which private healthcare providers such as specialists and surgeons contract to deliver services as set costs.
In all, 45 per cent of claims were handled by affiliated providers, but Southern Cross aims to have that at 60 per cent by the end of next year.
Tynan said the aim of the programme was to slow the rise in the cost of procedures, and create the platform for a sustainable private health industry in New Zealand.
He gave the example of colonoscopies, which had been rising in price by more than 7 per cent a year, but had fallen under 2 per cent in the past year.