How does not-for-profit health insurer Southern Cross maintain economic sustainability?

CEO of New Zealand's biggest health insurance provider tells all

How does not-for-profit health insurer Southern Cross maintain economic sustainability?

Life & Health

By Terry Gangcuangco

Southern Cross Health Society invests only one or two cents of every dollar it receives in insurance premiums – so, how does the biggest health insurer in New Zealand remain economically sustainable for its 952,000-strong membership? Here chief executive Nick Astwick (pictured) tells all.

Economic sustainability

According to Astwick, there are three key things that the award-winning not-for-profit friendly society needs to keep it sustainable and valuable – young and healthy members, prevention, and membership growth and retention.

“To be sustainable in health insurance, you need young, healthier lives,” the CEO said. “That’s part of the insurance model. So, we’re doing a lot to appeal to the young people that may not claim for hips and knees and heart surgery… The second area we’re really focussed on is prevention, so we’re doing a lot more to help prevent sickness from happening.”

Astwick cited bowel health as an example – the Health Society has a pilot programme that features bowel cancer screening.   

He noted: “We’re looking to scale that to prevent colorectal cancer… I think preventing sickness from happening and catching it really early helps with a sustainable system. The third thing is having more members to spread the load.

“So, those are the three big things: appealing to the young and healthy, making sure that we prevent things from happening, and actually growing the membership and keeping them longer.”

The average age of the Health Society’s members is 40, while the average tenure stands at around 16 years. To help maintain tenure, Astwick said a lot is being done to ensure affordable coverage and accessible benefits.

Upcoming changes

When the chief executive spoke with Insurance Business, he revealed that new benefits will be rolled out in 2024.

“What we’re really looking forward to next year is launching some new benefits for our members and also scaling our bowel health pilot,” Astwick said. “We’re also going to do some things a little bit different in the marketplace around getting our members to understand their health age and their pace of aging, rather than just their chronological age.

“We want to try and lift the level of consciousness of our members around the things that they can do to improve their health span. In line with our purpose of empowering our members to live well for longer, these are some things that we’re going to do, and I’m really excited.”

Premiums, meanwhile, are expected to rise due to the high-inflation environment, but assurances have been offered that any increase will be kept to a minimum.

“We’re working extremely hard to get that as low as possible,” Astwick declared. “We spend a lot of time and energy in ensuring that is the case.

“We also work hard to make sure that your premium goes as far as possible. We would have paid out $330 million less to our members if we paid 65 cents [in claims for every premium dollar] than the 88 cents. That’s absolutely massive, and that’s the Southern Cross difference right there.”      

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