Insurer says May, June claims levels are almost back to normal

Insurer says May, June claims levels are almost back to normal | Insurance Business

Insurer says May, June claims levels are almost back to normal

Southern Cross Health Society (SCHS) saw significant claims savings in the month of April, but has seen a rebound to almost normal levels throughout May and June, according to CEO Nick Astwick.

SCHS pledged to return $50 million in claims savings to its 884,000 members in April, the majority of which has now been paid out. Astwick says he isn’t anticipating any further significant savings as New Zealand enters its recovery period, and says it is likely that more deferred claims will be picked back up in the coming months.

Read more: Southern Cross pledges to return $50 million back to members

“The system was more or less closed down for the month of April,” Astwick told Insurance Business.

“We normally pay out $100 million worth of claims in April, but because of the effective management of the pandemic, May has been well and truly close to capacity. Our loss rations were close to 90% in May, and we’re expecting to see 100% in June.”

“It was really the month of April where we saw some disconnection, and we’d planned for a May and June impact too,” he explained. “But we’re now in a better position than we could have hoped for.”

Astwick noted that, contrary to motor vehicle insurance, most health risks are not significantly lowered through lockdown restrictions. He says SCHS has likely given away more than it’ll ultimately save, as approximately 80% of claims look likely to be deferred rather than avoided completely.

“We know that some claims will be delayed into May and June while others will be delayed into next year, but we’ve paid $50 million back to our membership, and that may end up being more than we actually save,” Astwick said.

Read more: Health insurer claims deferred, not reduced

“This is exactly the right thing to do in these circumstances. All the money that could potentially have been saved has been paid out, and it’s our big belief that no-one should be making excess profit from COVID.”

When it comes to returning savings to customers, Astwick says some insurers have been slower on this than others – though we may see more givebacks by the end of the financial year.

“Insurers may be waiting until the end of the year, but there are judgement calls to be made here,” he said.

“We made that decision very quickly, and we could see that the money was much better with our members than with us.”