Southern Cross delivers $5.8m surplus, as claims increase match premiums
Southern Cross Medical Care Society, the insurance arm of the not-for-profit health group, returned to an annual surplus as premiums and claims increased at the same pace.
The Auckland-based insurer posted a surplus of $5.8 million in the year ended June 30, from a deficit of $1.1 million a year earlier, it said in its 2015 annual report. Income from premiums increased 6.4% to $818 million while claims rose 6.2% to $738 million.
The company has $492 million invested, which generated $23 million of income, an increase of 24% on the previous financial year. It had $400 million on hand in reserves, to cover about seven months of claims.
In the annual report, chairman Greg Gent said rising claims inflation surpasses general inflation as the population ages, procedures become more expensive and the volume of claims increases.
In the year, the top procedures members claimed for were hip replacements, with $38.5 million paid out to members. That was followed by $36.9 million in knee replacements, $31.1 million for colonoscopies, $28.4 million in skin procedures and $26 million for cataracts.
Society chief executive Peter Tynan said the affiliated providers programme helped mitigate the impact of rising treatment costs. Begun in 1997, the programme now involves 1266 providers across 20 specialties and makes up 45% of all claims, which it aims to lift to 60% by the end of the year.
New Zealand's largest insurer, with 811,462 members, or 61% of the market, paid out 73% of the country's health insurance claims. For every dollar a customer pays in premiums, Southern Cross returns 90.2c, compared to the industry average of 65c, Mr Gent said.