Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Southern Cross posts $1.1 mln loss after unexpected claims

Southern Cross posts $1.1 million loss after unexpected claim costs

By Fiona Rotherham

Sept. 15 (BusinessDesk) - Southern Cross Medical Care Society, New Zealand's largest medical and health insurer, has recorded a $1.1 million annual loss after higher than expected claims from members.

The not-for-profit insurer's annual report for the June 2014 financial year showed a record $694.5 million claims were paid out, up 8.7 per cent on the previous year and that led to a turnaround from last year's $22,106 surplus to a $1.1 million loss.

Society chairman Graeme Hawkins said there was an unexpected increase in claims in the last four months of the financial year, particularly for orthopaedic procedures and specialist consultations.

"Although the society is not concerned with generating profit, the continuing rise in claims cost is of concern because it directly impacts the premiums of our members," Hawkins said.

The society earned $768.4 million in premiums, up 5.9 per cent on the previous year, while overheads were slightly reduced by $700,000 to $93.5 million.

For every dollar in premium income, the society paid out 90.4 cents to members, well above the industry average of 67.5 cents. Membership also declined but in line with the industry trend to 815,447 members, down 0.3 per cent on 2013. Still, the society continues to have strong reserves of $394.3 million, equivalent to about seven months in claims.

Society chief executive Peter Tynan said the society's affiliated providers programme was a key way of helping mitigate the impact of rising treatment costs. Begun in 1997, the programme now involves over 1,000 providers who seek prior approval and handle claims on behalf of members.

Around 34 per cent of all Southern Cross claims now come under the programme and the aim is to grow that to 60 per cent by 2016. Ten new procedures that would be covered by affiliated providers only were added this year and more will come this year, Tynan said.

There is resistance to the programme, now being copied by other industry providers, as it restrains the fees they can charge and locks out those that won't agree.

Southern Cross is the industry heavyweight covering 61 per cent of New Zealanders with health insurance and pays out 72 per cent of all health insurance claims.

Other tools for reducing costs include restricting new medical technology and procedures unless there is clear clinical benefit and also working with members who have been denied funding for accident or injury treatment by ACC. Tynan said the society helped 319 members challenge Accident Compensation Corp in the past financial year, leading to cost recovery of $1.7 million.

The society was also refunded a further $2.8 million for health services payments it had paid out that should have been covered by ACC.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Real Estate: Foreign Buyers Ban Passes Third Reading

The Bill to put in place the Government’s policy of banning overseas buyers of existing homes has passed its third and final reading in the House. More>>


Nine Merger: Fairfax Slashes Value Of NZ Business

Fairfax Media Group more than halved the value of its Kiwi assets, attaching just A$40 million to mastheads that were once the core of a billion dollar investment. More>>

Collecting Scalpers: Commerce Commission To Sue Viagogo

The Commission will claim that Viagogo made false or misleading representations: • that it was an “official” seller, when it was not • that tickets were limited or about to sell out • that consumers were “guaranteed” to receive valid tickets for their event • about the price of tickets... More>>


Price Of Cheese: Fonterra CEO Goes Early After Milk Price Trimmed

Aug. 15 (BusinessDesk) - Fonterra Cooperative Group chief executive Theo Spierings is leaving the role early after the world's biggest dairy exporter lowered its farmgate payout and trimmed its dividend to retain cash. More>>