New Zealand’s biggest health insurer, Southern Cross Health Society, now consists of more than 955,300 members – the highest count since 1992 – as demand for private healthcare continues to grow. Of those members, more are claiming, the not-for-profit friendly society has found, while claims frequency has also gone up.
“What we’ve seen is we’ve never been more popular,” chief executive Nick Astwick (pictured) told Insurance Business. “We’ve sustained the eighth year of membership growth. We’ve had more members claim – in 2019 it was 33% of our membership; last year was 50% of our members – and they’re claiming more.”
In the year ended June 30, the Health Society (also referred to as Southern Cross Health Insurance) paid out $1.498 billion in claims from $1.605 billion received in premiums – translating to 93.4 cents of claims payment out of every dollar of premiums. Excluding Southern Cross, the industry average sits at 73 cents.
“I think people are waking up that maybe that access [to the public system] is not as guaranteed as it was in the past,” Astwick said. “Plus you’ve got a cost-of-living challenge where every dollar counts. So, I think we’ve just become more in demand and more utilised.”
According to Southern Cross Health Insurance, its members’ 3.2 million claims in FY24 included nearly 317,000 surgical procedures, more than 609,500 specialist consultations, and around 810,000 GP visits. Value-wise, knee replacements amounted to $70.7 million in claims payments, while colonoscopy procedures resulted in a combined $70.2 million.
With the cost of claims rising by 15% in FY24 while premiums grew by just 9%, the health insurer posted a net deficit of $99.1 million, $43 million of which was attributed to a change in international financial reporting standards during the past financial year.
As for the wider Southern Cross Health Society Group, which includes subsidiaries offering other products such as pet and travel insurance, the deficit after tax was $88.2 million. Despite the deficit, which Astwick’s camp had anticipated, the Health Society Group has total reserves of $470.7 million.
Moving forward, the goal is to generate small surpluses to remain financially sustainable.
“Small surpluses is what we plan for,” Astwick told Insurance Business. “It’s still early into this new financial year, but we’re on track for that.”
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