by Susan Edmunds
Southern Cross has today released its results for the year ended June 30.
It made a surplus of $5.8 million, up from a deficit of $1.1 million last year.
Membership decreased 0.5% over the year, to 811,462.
Southern Cross has 61% of the health insurance market but paid out 73% of the country's claims last year.
For every $1 in premiums, it paid out 90.2c in claims. It earned $818 million in premium income and paid out $738 million in claims.
Tynan said: "This clearly represents excellent value for our members, especially when you consider that the average for the industry's for-profit insurers was 60c."
Southern Cross processed 3.1 million claims in the year, including 170,000 elective surgeries.
Hip replacements were the biggest claim by cost, with $38.5 million paid out.
Tynan said the over-65 age group accounted for 14% of Southern Cross' members but 36% of all claims and 39% of elective surgeries. Its oldest claiming member is 101.
Those members are rated in their own pool so they pay for their own claims experience, with a small cross-subsidy.
Premiums across the board rose 6.4% in the year but some older members saw theirs go up 10%.
But Tynan said the group claimed twice as much as the comparable age group before them. Affordability of policies was their biggest concern.
He said that was one of the reasons Southern Cross was encouraging its members to lobby their MPs in support of New Zealand First's Affordable Healthcare Bill.
It proposes a 25% health insurance rebate for people aged over 65, and the removal of fringe benefit tax from health insurance to incentivise employers to include it in salary packages.
Tynan said Southern Cross’ research had shown that 56% of employers would consider resubsidising health insurance if they were not charged fringe benefit tax.
“Health insurance helps productivity, it helps get people back to work faster,” Tynan said. “You don’t get charged fringe benefit tax on ACC levies.”
He said the number of younger people insured by Southern Cross was growing but most of those customers joined via corporate schemes rather than through the HealthEssentials products, which are aimed at young customers and pay out for everyday healthcare needs.
“Delivering value in an environment of rapid claims inflation isn’t without challenge,” Tynan said. “We’re working hard to mitigate rising claims inflation and our main way to address this is the Affiliated Provider programme where we work with providers to agree prices."
Southern Cross has 1266 Affiliated Providers across 20 specialties - such as skin, ophthalmology and orthopaedic. The programme currently accounts for around 45% of claims, and the business aims to grow this to 60% by the end of 2016.
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