Southern Cross posts $16.5m annual loss as it capped premium prices

Chief executive Nick Astwick says premium prices were up about 5.1% in the latest year compared with the more usual 6% increase.

The results showed net premium revenue rose 12.6% to $1.56 billion in the year with membership growing by nearly 32,000 to 940,105, giving the company about 60% of the health insurance market. That followed growth of 20,000 net new members the previous year.

However, Astwick is warning that the Reserve Bank's decision to raise solvency requirements for insurance companies will mean Southern Cross will have to raise premiums and make more profits during the next five or six years.

“The intention of having well-capitalised financial institutions is essential,” Astwick says, but adds that what the central bank is planning may have “some unintended consequences” and “may demand more capital than we think is necessary.”