Southern Cross surplus sinks 81% on rising payouts
Southern Cross Medical Care Society, the not-for-profit health insurer, saw its annual surplus drop 81% 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% to $923 million, the fourth year in a row that premium income has risen by about 6%. That outpaced a 4% 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%. Ninety cents of every dollar paid in premiums went on members' treatment, up from 86c 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% 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% 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.