Southern Cross surplus sinks 81% on rising payouts

Friday 15th September 2017

Southern Cross Medical Care Society, the not-for-profit health insurer, saw its annual surplus drop 81 percent as an increase in claims outpaced rising premiums.

The Auckland-based mutual posted a surplus of $6.8 million, down from $35 million a year earlier when relatively flat claims led to a jump from a $5.8 million surplus reported in 2015. Income from premiums rose 6 percent to $923 million, the fourth year in a row that premium income has risen by about 6 percent. That outpaced a 4 percent increase in membership to 853,160 members.

Southern Cross paid out about $830 million in claims in the 2016 financial year, compared with $749 million a year earlier, a rise of 11 percent. Ninety cents of every dollar paid in premiums went on members' treatment, up from 86 cents the previous year. Its reserves stand at $441.3 million.

In a report to members, chairman Greg Gent said Southern Cross invested in digital technology over the past year, with more than 80 percent of its claims now submitted electronically.

"We’ve seen robust growth across a number of significant areas and have continued to enhance the way members can interact with us via digital technology,” Gent said. "We’ve also welcomed a new CEO in Nick Astwick, who brings a fresh perspective and new set of skills. All-in-all we’ve finished the year in good stead and are well positioned to take on the next 12 months."

The company increased its number of easy-claim providers by 35 percent to 2171, while the number of affiliated providers contracted with Southern Cross for healthcare services rose to about 1850 from about 1300 the year earlier, resulting in savings of around $35 million for the 2016/17 year, it said.

(BusinessDesk)

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