The 2013 financial year saw New Zealand’s largest health insurer, Southern Cross Medical Care Society, retain its strong and stable financial position and continue to deliver excellent value to its members.
During the year the Society earned $725.5 million in premiums, up 2.6% on 2012, and incurred $639.1 million in claims, up 5.5%.
Health Society Chief Executive, Peter Tynan, says this means that for every dollar received in premium income, over 88 cents was returned to members in claims.
Despite claims increasing more than premium income, the annual surplus for the year was within the budgeted range - at $22.1 million. As a not for profit Friendly Society this surplus is retained for the benefit of members and used to:
At year end, the Society’s reserves sat at $395.4 million. This is equivalent to approximately seven months’ worth of claims and is within the target solvency range established by the Board.
Mr Tynan says, “These reserves have helped the Society maintain its A+ financial strength rating from Standard and Poor’s, for the eleventh consecutive year. The Society is operating in a sound and sustainable manner to ensure that it will meet members’ healthcare funding needs in years to come.”
Over the past year the health insurance sector as a whole saw a small decline of 0.7% in the number of New Zealanders with health insurance. The Society fared slightly better than other insurers, with a membership decrease of 0.5%. This saw the Society’s market share increase slightly from 61.0% to 61.1% and end the financial year with 817,822 members.
Given the size of its member base, Tynan says the Society has a responsibility to take a leadership position with regard to strategies that ensure long-term value for members’ health spend.
The Affiliated Provider programme, in which the Society contracts with specialists and facilities to provide healthcare services at agreed prices, is one such initiative that now accounts for over 27% of all claims costs. There are currently 360 agreements in place, including 700 individual healthcare providers nationwide across 20 different medical specialties.
Members also benefit from the programme as Affiliated Providers organise prior approval and claims on their behalf, removing as much of the paperwork burden from patients as possible.