Southern Cross Health Society says reported a full year loss compared with a gain last year, reflecting a large 42 percent increase in expenses. Photo: 123RF
Southern Cross Health Society says it will be increasing the price of health insurance, amid rising costs, increased claims and a need to increase its capital reserves.
The company reported a full year loss compared with a gain last year, reflecting a large 42 percent increase in expenses, particularly labour costs, which were not fully passed on to members by way of an increase in premiums.
Key numbers for the 12 months ended June compared with a year ago:
- Net loss $16.5m vs surplus $90.1m (includes deficit of $5.4m reported by Society’s subsidiary investments including Southern Cross Pet Insurance and Southern Cross Travel Insurance)
- Operating loss $44.1m vs surplus $108.5m
- Net claims $1.36b vs $1.1b
- Operating expenses $245.7 m vs $172.5 m (includes operating expenses for Southern Cross Travel Insurance, which was introduced to Southern Cross Health Society in FY23)
- Members 940,105 vs 908,176
Chief executive Nick Astwick said the society was aware of the financial pressure on members, which was why the group had absorbed some of the rising costs by holding last year's premiums increase to 5.1 percent.
Otherwise he said premiums would have risen about 8 percent last year, while rates for the coming year were to rise 7.1 percent.
"We know many New Zealand households are doing it tough right now as the cost of living continues to bite ... which is why we strive to identify and action efficiencies and cost savings where we can," he said.
"The inflationary environment still buffeting New Zealand has also impacted the society, particularly through the increasing costs of providing healthcare.
"Premiums are also affected by the rise in the volume of claims we're receiving, and our need to increase the level of our capital reserves to meet the new Reserve Bank of New Zealand interim solvency standards."
However, much of the revenue was paid back to members in claims.
"For every dollar paid in premiums over the last financial year, 88.4 cents was returned to members in claims," he said.
The insurer paid out $1.3 billion in claims from $1.6b received in premiums, with membership rising to the highest level in more than three decades, including 223 new businesses offering health insurance for their employees.
"While we make up 60 percent of New Zealand's health insurance market, we pay 72 percent of the value of all health insurance claims paid in Aotearoa," Astwick said.
Labour costs rose about 70 percent on the year earlier to $122.9m compared with $85.8m.
