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Southern Cross says it told advisers, policyholders of withdrawn benefit

Southern Cross Health Society has acknowledged it removed a $60,000 a year benefit for non-surgical hospitalisation from its policies but is claiming it advised both advisers and policyholders of the change.

Friday, September 1st 2023, 2:04PM 9 Comments

by Jenny Ruth

“The non-surgical hospitalisation benefit was removed as part of [the] society's benefit review in 2020,” says the head of customer strategy and experience, Nic Johnson, in a statement.

“Members were communicated with at the time of the benefit change,” Johnson says.

As GoodReturns has reported, the notification sent to policyholders in November 2020 referred only to additional coverage and did not say that the non-surgical hospitalisation cover was being removed.

Johnson says Southern Cross advisers were also told about the changes at the time via a virtual meeting and that advisers also have access to the company's adviser gateway portal to manager their customers' policies.

“The portal includes a news section where notifications related to all benefit/policy changes are published,” he says.

“The original intention of the non-surgical hospitalisation benefit was as a 'catch-all' for eligible healthcare services that required in-hospital medical treatment. Based on a 2019 review of our claims data, which showed that the benefit was not widely utilised, it was assessed that this benefit was no longer fit-for-purpose,” Johnson says.

“The majority of medical (or hospitalisation) claims at the time were already covered under existing benefits, such as the surgical procedures, chemotherapy, radiotherapy and diagnostic tests/imaging benefits,” he says.

These benefits “more precisely defined coverage, and, to align with this approach, the non-surgical benefit was repositioned so that it more acurately reflected what members received.”

The type of claims which the original benefit covered are now covered by and IV infusion (non-cancer) benefit “with any additional outlier reassigned to other benefits where it more appropriately fit,” Johnson says.

The IV infusion benefit provides up to $750 a year under Southern Cross' Wellbeing Two with $500 excess policy, for example, and up to $600 in claims a year under its Kiwicare policy.

Johnson says other benefits that replaced the one removed include overnight stays associated with a sleep study, which continue to be covered under the diagnostic test benefit, and cardiac in-patient claims following private cardiac assessments that resulted in a member requiring same-day in-patient care.

The surgical procedures benefit continues to cover hospital stays for eligible medical healthcare services, such as injections provided by a specialist and pain management.

“In terms of the hospital accommodation, early admission for treatment is covered under the appropriate benefits,” Johnson says.

“However, any hospital stays for monitoring or pending diagnosis [with the exception of cardiac assessments] is not covered and has never been covered as this is the role of the public health system,” he says.

Tags: Southern Cross

« Southern Cross drops $60k benefit by stealth: agentsOther health insurers are much more generous than Southern Cross »

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Comments from our readers

On 1 September 2023 at 3:15 pm JPHale said:
The expected spin from Southern Cross

Interestingly the portal webinar they reference hasn't been available for a long time. Their site says the content is restricted.

As to the rest of the communication, nope, nothing about benefits being removed.

They talk about new benefits and treatments added, which was covered in the initial article, but say nothing about benefits removed.

For Southern Cross to rely on a webinar that is a restricted audience to communicate this to policy holders is disingenuous crap. And even then the content won't have said this outright either.

I said from the start this is a benefit not claimed a lot, as Southern Cross has moved to defined claim criteria.

The removal of non-surgery hospital benefits for future treatments, we know will turn up, and coverage for this is an expectation of policyholders.

It is fundamental coverage all policyholders expect even if they don't know where in their policy it's listed.

On 1 September 2023 at 3:52 pm Lifer said:
Perhaps given the timing of when the changes were slipped through they were trying to avoid covid related claims? Swappping $60,000 worth of benefit for a maximum of $5,000 claimable benefits is hardly an "enhancement". I do wonder if it is a breach of the Fair Trading Act though? How does that math work on that that - reducing coverage in breadth and dollar value is an enhancement? Lastly, if it wasnt being widely utilised as they claim, why the need to remove it?
On 1 September 2023 at 4:00 pm JPHale said:
“The original intention of the non-surgical hospitalisation benefit was as a 'catch-all' for eligible healthcare services that required in-hospital medical treatment. Based on a 2019 review of our claims data, which showed that the benefit was not widely utilised, it was assessed that this benefit was no longer fit-for-purpose,” Johnson says.

Yes, that's the damn point! "non-surgical hospitalisation benefit was as a 'catch-all' for eligible healthcare services that required in-hospital medical treatment."

Without this, any new treatment in private hospital settings that is MedSafe-approved and Pharmac-funded is not covered unless, by chance, it falls into a claim area that happens to already exist!

It is no surprise that it had low claims because Southern Cross has progressively defined benefits for these things over time.

The contrived media statement doesn't acknowledge the very purpose of the benefit in the first place and demonstrates that the decision makers on this don't understand their primary product.

I'm steamed about this because I saw, and was involved in, getting a good number of the new to private hospital healthcare benefits paid for people before 2010 under non-surgical hospitalisation.

I have had many clients with interesting claims that needed this benefit for their claim payments with both Southern Cross and other providers that, luckily, they haven't needed to with Southern Cross in the last three years! But that is only by chance!
On 1 September 2023 at 4:35 pm Aggressively_passive said:
can't decide if this is misinformation, disinformation, or gaslighting.

so, where a multi-day IV infusion is now covered by a new IV benefit, up to $750 a year, that used to be covered up to $60k per year. But please, tell me more about this "more precisely defined" coverage.

Tell me more about this "2019" review. Convenient.
Because November 2020 came immediately after a lot of people that year had been hospitalized, without surgery...
On 1 September 2023 at 8:46 pm Graeme Lindsay said:
One has to ask - whilst it may not have been widely utilised, but even a few claims does not justify removal! Some Southern Cross members benefitted! If it wasn't a major cost, why remove it?

I have a copy of the advice to SC members and it does not state that the benefit is being removed.

Further, I understand that the SC October 14 2020 Strategy and Product Update for advisers is not available on the SC website despite requests to SC to reinstate the advice!

On 4 September 2023 at 2:01 pm Backstage said:
Several years ago Southern Cross would not deal with advisers until they discovered adviser delivered business was chomping away at their share.

Companies like Aetna, National and Metlife disturbed their position in the market and advisers educated clients on quality alternatives.

So, Southern Cross decided to embrace advisers and try to make friends despite their lack of quality.

Unfortunately, the old marketing trick where a big brand is perceived to have the best quality started to erode when advisers educated consumers.

Southern Cross almost always held advisers in distain, hated paying a commission despite it only being paid if a product was sold. They later went on to change those commission terms on advisers and really are very very difficult to deal with on behalf of clients treating advisers like rubbish.

Overall, they are an arrogant business and often run by folk who undervalue advisers and have little insurance understanding.

They have favorable tax status which is an advantage over almost all other medical insurance suppliers.

Wording that is not guaranteed and this event should be investigated as a COFI issue.
On 4 September 2023 at 11:11 pm Aggressively_passive said:
Remember in 2018 when the Herald ran the headline:
"More than 800,000 Southern Cross customers stripped of funeral insurance"
NZHerald 3 October 2018

Southern Cross sure does.

Hot on the heels of reporting a $13,000,000 deficit in their 2018 annual report, they then removed or reduced Obstetrics Benefit, depending on the plan. And they removed the Funeral Benefit, Public Hospital Cash Grant, Premium Waiver, and Sterilisation Benefits too.
The Regularcare excess was increased 500%
and this was followed by circa 20% premium hikes thru 2019.

But November 2020 was a different time.
When the $60k non-surgical hospitalization benefit was removed, they hadn't just made a massive loss. Their efforts of recent years had worked mightily well, and in September 2020 they reported a $32.4M surplus after generously returning $50M of premiums during the level 4 lockdowns.

Their surplus grew again in 2021 to $53M
then 2022 $108M
How much will this year be?

So, can we go back and figure out EXACTLY why that benefit HAD to be secretly removed?
On 6 September 2023 at 8:22 am JPHale said:
@Aggressively_passive thanks for the additional angle here. One I hadn't looked at.

Makes for an interesting correlation with the “avoid covid” comments…

Three things:
1. SX have said they considered this benefit for removal in 2018/2019. BS as that would have been done then or should have been a communicated strategy at the least.
Granted they may have had a strategy to do so, but that speaks to a greater hiding of intentions against their own terms and conditions.
2. There has been no financial pressure to remove said benefit at the time. Absolutely zero pressure.
3. Raises the question, in removing and reducing benefits that they have, how many people have been impacted to enable that increase in profits?

Nothing against profits, they have to pay the bills to be here as an insurer. It's the “at the expense of their members” bit that's going on given their statements about being for their members.

When you consider that several of the management come from a banking background I can understand the brutal approach to just doing what they want. We see the same behaviour with the banks in the lending space.

In some ways, I'm surprised I still have my agency, as the banks tend to approach this level of challenge by canceling adviser accreditations.

So we have a list of things that Southern Cross continues to dig holes with.

The adviser briefing video is live again, interestingly after not being available for the better part of two years, probably only because it's the only time SX has said anything about removing this benefit. But only turned it on when challenged, basically hiding it until they were found out.

There wasn't the level of communication their own policy terms and conditions demands, providing a benefit sheet with a one-line benefit removed without any notice is not communication by the T’s & C’s

They have confirmed it to be a catch-all benefit while disingenuously defining new benefits and justifying that as a lack of claims making the benefit obsolete.

They have lied through omission to policyholders, advisers and the wider industry engagement by actively hiding what they have done.

This isn't the behaviour of a company that says it looks after people, it's quite the opposite.

People have been questioning the need for CoFI, this is the example of why it is needed. One also has to wonder if SX has been heavy on the lobbying of National in their policy statements because they just can't face that they may be held accountable.

At this point Southern Cross needs to stop digging and put this right.

1. Front up and accept the behaviour was less than expected of them. Fall on the sword and face the music.
2. Reinstate the non-surgerical benefit, it is an expected fundamental of policies for future treatments for those with medical cover.
3. Walk back the changes and actively address the harm done to members that should have had coverage since removal.

You probably can't solve the medical bit, but you can put right the financial impact on those people.

The wider adviser community has a poor view of Southern Cross, demonstrated across many different platforms.

It's time to stop digging holes and start putting things right.
On 12 September 2023 at 11:33 am JPHale said:
Further to the challenges of expiring documents on updates and product information, Southern Cross has just implemented a system for "secure" communications with advisers where the messages actively expire after 30 days.

So much for taking a decent holiday or hitting the beach in Summer. You have to be around to log in and collect your mail before it expires into the ether.

On the subject of transparency and increased confidence in the industry, this is just rubbish.

SX has justified this as improving security on email communications but fails to appreciate that email communications in NZ are pretty secure; this is just more obfuscation to hide things and not get caught out with "proof" of their bad behaviour.

This change overlooks the fundamental reality that this new expiring tool is just as insecure as the adviser's own email account, being that most will likely have the same username and password as their email, and it's shared with their admin staff.

Southern Cross another massive miss on intention here that says more about a lack of understanding of the adviser marketplace and what goes on in small business NZ...

Do better!

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