Calls for health insurance revamp irks provider
Ian McPherson, head of Southern Cross, has slammed the suggestion by his rival at Sovereign that the health insurance sector needs to “start again”.
Thursday, October 2nd 2008, 12:33PM
by David Chaplin
According to McPherson, comments by Simon Blair, Sovereign managing director (reported on Good Returns this Tuesday) that younger people were missing out on health insurance were off the mark.He said of the almost 835,000 Southern Cross members about 25% were aged under 20 while only 17% were over 60.
“Over 200,000 of our members are under 20, while the 21-50 year old age group accounts for around 350,000 of our membership, so it’s hard to see where the difficulties lie in attracting a younger market,” McPherson said.
He also countered Blair’s claim that the overweighting to older people in health insurance pools had pushed up premiums, forcing many to lapse policies, which in turn pushed costs of health cover even higher.
McPherson said “pricing to risk” enabled a fairer spread of premiums among Southern Cross members.
“Pricing to risk does mean older people pay more, but the converse is that they also claim more - to the extent that claims paid in the last financial year to those Southern Cross members aged over 60 years were slightly more than the premiums received,” he said.
McPherson said Southern Cross had already developed a new range of products that Blair said the industry must create in order to survive.
He said innovations such as health management accounts, healthy lifestyle rebates and low claims rewards were standard practice at Southern Cross.
“When you get down to it, Southern Cross, as a not-for-profit, is always going to come at product development from a different angle to our for-profit colleagues,” McPherson said. “We paid 89.6 cents in claims for every dollar of premium income in the last financial year. Our for-profit colleagues would have some explaining to do to shareholders if their ratios were at that level.”
To read Tuesday's story, click here
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