Insurer Refutes Anderton Claims

Insurer Refutes Anderton Claims

The Southern Cross Medical Care Society has refuted claims by Progressive Party Leader, Jim Anderton, that its recently announced 6.5% increase in base rate premiums had “reversed insurance principles.”

“With the greatest respect to Mr Anderton, he does not understand that the most basic principle of insurance is risk, and premiums must reflect that. In medical insurance, risks increase as people age as does the cost of their claims and the frequency of them,” said the Chief Operating Officer of Southern Cross Healthcare’s insurance operations business, Lisa Gunnery.

“Mr Anderton also gives the impression that Members’ premiums should accumulate on their behalf if they do not claim each year and can be called on in later years. In fact, annual premiums pay for a year of cover at the rate which accurately reflects the person’s plan, age and claims for that age group.

“You find a similar pattern in other forms of insurance – for example, a driver under the age of 25 pays a higher premium than older drivers and that is a direct reflection of risk and claims frequency in that part of the insurance industry and in that age group.”

All insurers establish premiums to ensure they can cover the cost of claims across the risk pool. Failing to do so would be unsustainable, particularly for Southern Cross as a not-for-profit friendly society.

Ms Gunnery said Mr Anderton was under the misconception that Southern Cross was raising premiums for the elderly to benefit younger members. This is not the case.

“The increase for older members directly relates to the fact that more people in this group are making more claims. One in three over 65s claim for surgery each year. The average cost of these claims is increasing because of factors such as higher fees, more complex procedures, more demand and the use of advanced, but also expensive, medical technologies.”

Ms Gunnery said the Society fully empathised with its older members, but there was a limit on what it could do to control the medical inflation which drove higher claims and therefore higher premiums.

“Higher costs coupled with higher demand are problems that are not going to go away. It’s important that we find ways to identify some solutions which enable older people to have access to the private system for as long as possible.”

Southern Cross advocates a collaborative approach between Government, providers and the combined private health sector to find long-term solutions.

About Southern Cross Healthcare
Southern Cross Healthcare is comprised of two organisations that focus on the health sector in New Zealand:

• One organisation, the first created, is the Southern Cross Medical Care Society with over 800,000 members. It is a not for profit Friendly Society that focuses on delivering health insurance services for both individual members and group schemes.

• The other organisation is the Southern Cross Health Trust. It consists of the Southern Cross Hospitals - New Zealand’s only private hospital network, and Southern Cross Travel Insurance.

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