Premium Relief a Focus at Southern Cross AGM

News release
8 December 2011

Premium Relief a Focus at Southern Cross AGM

The focus for members attending the 2011 Southern Cross Medical Care Society Annual General Meeting on Tuesday was premium relief.

Southern Cross members voted in favour of two resolutions put to the AGM to investigate ways loyalty of longstanding members may be recognised, and if those members’ premiums could be reduced. The meeting also discussed current strategies by the Society to manage claims cost – such as the Affiliated Provider programme.

Chairman Graeme Hawkins says, “The Society’s Board and management recognise the huge pressure that health insurance premiums can put on retired people on fixed incomes. Those members are saying that at a time in their lives when they most need healthcare they are finding it very difficult to pay for it.”

Health insurance premiums generally increase with age because older people tend to require more healthcare and therefore claim more. For example, those aged over 65 make up 11.6% of the Southern Cross membership, but accounted for 33% of claims for the 2011 financial year.

Over the years, Southern Cross has talked to various Government Ministers about the idea of a tax rebate for those aged 65 years and over, and removing FBT from premiums paid by corporate groups. More recently, Southern Cross has also promoted the idea of a Kiwisaver-style health savings fund and possible industry regulation in order to change how premiums are calculated - as is done in Australia.

Hawkins says, “The message our older members are sending us, and the Government, is that something needs to happen to prevent more people giving up their health insurance and falling back on the public health system. This issue is not one that will go away – especially as our country’s population ages.

“This strong signal highlights the need for greater collaboration between the Government and the private health sector.”

Hawkins says, “The Government provided elective surgery to 138,000 patients in the last year. They will have to continue providing these record numbers to stop waiting lists from ballooning. And those 830,000 Southern Cross members who choose to insure play a huge part in keeping public waiting lists down. Southern Cross alone funded 158,000 elective surgeries in the last year. So a strong private sector is essential to a strong public sector.”

Affiliated Provider Programme:
In other items of business, resolutions related to choice and alternatives to the Affiliated Provider programme fell just short of majority support, while a resolution related to distribution of assets in the event of the Society’s dissolution also fell short.

Mr Hawkins commented that “The Affiliated Provider programme is a key strategy to manage future claims costs while delivering a streamlined service, and is widely supported by members. It was good to hear member’s views on this topic and I think the discussion held at the AGM highlights the wide range of choice which already exists through the programme.”

Distribution of Assets:
“As for the resolution regarding distribution of assets, hopefully this will put to rest some of the speculation surrounding the future structure of the Society. The Board’s view, and that of many members, is that the current not-for-profit Friendly Society structure delivers great value and there is little benefit in exploring alternatives at this time.”

Election of Directors/Trustee:
Mr Greg Gent was elected as a new Director. Mr Gent is a dairy farmer from Ruawai with a strong record of governance experience in mutual/cooperative businesses, insurance and health. He has recently stepped down after ten years as a director of New Zealand’s largest co-operative business, Fonterra. He currently chairs Farmers Mutual Group (a mutual rural insurance company) and was appointed to the Northland District Health Board by the Minister of Health in 2010.

Chairman Graeme Hawkins was re-elected as a Director and Carole Durbin as Trustee.

Rule changes:
A special resolution was passed to make minor wording changes to three Southern Cross Medical Care Society Rules related to member proposals. (Rule 13.14, Rule 13.15(c), Rule 13.15(d)).

No other resolutions were passed by the membership.

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Southern Cross Medical Care Society
The Society was established in 1961 and trades under the brand name Southern Cross Health Society. As a not-for-profit Friendly Society, this entity is owned and operated for the benefit of its members, not investors or shareholders. The Society covers 61 per cent of New Zealand’s private health insurance market. In the 2011 financial year, Southern Cross processed 580,000 claims, which included the funding of 158,000 elective surgical procedures. Premium income was $662.5 million, while claims paid totalled $577.1 million.

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