From the perspective of Southern Cross Health Society Group, three key things are set to happen in the financial year that began in July 2022 (FY23). Chief executive Nick Astwick (pictured) sat down with Insurance Business to talk about what lies ahead for the organisation.
“I think it’s going to be more of a normal year in terms of our members’ access to healthcare,” said the CEO, whose camp saw lower-than-expected claims numbers in FY22 due to lockdowns and sickness among nurses and clinicians. “The private system is fully operational, and we’re expecting a busy year… There’s been a deferral or delay, so claims will largely turn up in the year that we’re in now.
“The second thing is, we think there’s going to be a bit of a tougher climate for businesses and for members, so our focus still remains on the affordability of our proposition. The third thing is, you’ll see more from us around propositions for wellbeing like we did with ‘Better ‘22’, so the things around products and services to enable New Zealanders to live their healthiest lives.”
The group, which reported an FY22 surplus worth $90 million, consists of health insurer Southern Cross Health Society and subsidiaries including Southern Cross Pet Insurance and Southern Cross Travel Insurance.
Astwick noted: “In the last couple of years, the Society Group has bought both the pet and the travel business from the Southern Cross Healthcare Group that used to own it. Southern Cross Health Society Group, obviously, is in the business of health insurance, but it does have investments in pet, life, and travel.
“That’s how we’ve invested some of our reserves and capital, and we’re going to use those profits from those businesses to further dampen the effects of premium inflation. So, the profits earned from those businesses will help members in slowing the premium growth.”
The CEO confirmed that, indeed, there will be an increase in the health insurance premiums and that it will just be a matter of ‘by how much’. Astwick, however, stressed that they will do all they can to keep the price climb to a minimum.
“We’re trying to use our reserves or our surplus from last year to keep the premium as low as we possibly can,” Astwick told Insurance Business. “It will still go up – that’s what we’re forecasting – but it won’t be going up as much because we’re using the surplus.
“We are also affected by inflation like households and businesses are, and so we’ll use some of the surplus to soften that… That’s what a not-for-profit really does, is look through how we can support members in the best way possible. We’re going to use some of that surplus to do that.”
The Southern Cross boss went on to highlight: “When you look at the last five years, for every dollar of premium, 86 cents has gone out to pay for healthcare. The market without us is 65 cents (NZ industry average excluding Southern Cross). So, we’re really there to fund our members’ healthcare – that’s the Southern Cross difference.”
In terms of membership numbers, the Society enjoyed record growth, which Astwick considers the standout from the FY22 results.
“We’ve seen a real shift in the market valuing health insurance for a number of reasons,” he declared. “I think there are three things that are going on in the market. The first is, it’s a tight labour market, so employers are really investing in their employee benefits, and health insurance is seen as one of the top employee benefits. So, we’ve certainly seen a shift there. We had 209 new groups join us last year, which is the highest ever.
“Secondly, health is on everyone’s mind, for obvious reasons, over the last two or three years. And the third reason is valuing access to health. What we’re seeing is more of our existing customers hold their health insurance for longer, seeking the assurance of that. So, it’s those three market dynamics going on.”
The Society’s members count stands at 908,176 – the highest since 1992.
“One thing that also has contributed to that, particularly for the young, is our ‘Better ‘22’,” added Astwick. “All our members, irrespective of the product that they got, got free virtual GP (general practitioner) consults, mental health consults with Raise, and had free flu vaccinations.
“So, being a member of the Society has got real value. A lot of the young ones really want that. They don’t see the need for surgery in the short term, and so those things have been really successful in getting some of the younger members going, ‘Yep, I want to stay with Southern Cross’.”
In FY22, the health insurer alone (without the travel or pet business) paid three million claims including 631,739 GP visits and 520,021 specialist consultations.
