Anne Gibson

Property editor of the NZ Herald

Southern Cross says it has nothing to fear

Peter Tynan. Photo / Sarah Ivey
Peter Tynan. Photo / Sarah Ivey

The country's biggest health insurer has dismissed the arrival of an Australian competitor, saying it has nothing to fear and took a swipe at it for being a company rather than a friendly society.

Peter Tynan, Southern Cross Health Society chief executive, said the arrival of NIB, soon to own New Zealand's Tower Medical, would not result in any changes for his members.

"While the entry of a new competitor is always of interest, it will not cause us to divert from our current focus," Tynan said, because the society was focused on delivering value.

"Southern Cross is a very different business to NIB. We operate solely for the benefit of our members and our core focus is to return as much value as possible to them. We do not operate to make profits for overseas shareholders," Tynan said. "We believe a strong private health insurance market is good for New Zealand."

ASX-listed NIB is being tipped to launch an aggressive marketing campaign after paying $102 million for Tower's health insurance business but the deal is still conditional on Overseas Investment Office approval.

Settlement is due before December 31.

Mark Fitzgibbon, NIB chief executive, was here this week vowing to seek ways to expand the insurance market from its low participation rate and saying the business had been investigating opportunities here for some time.

Tower Medical was a natural fit because it met NIB's strict investment criteria in terms of strategic rationale and return on investment, Fitzgibbon said.

In late October, Southern Cross Health Society chairman Graeme Hawkins sent 822,422 members an annual meeting notice setting the date for an evening, to encourage more participation from people working during the day.

Last year's AGM was held during the day but the society said the hope was that more member would attend the 7pm Auckland meeting on December 6.

A performance overview issued with the notice said that in the year to June 30, 2012, $706.8 million premium income was received and $605.5 million paid out in claims.

"That means for every dollar received in premium, 85.7 cents was used to pay for members' healthcare services," the overview said.

Lower claims in the first six months resulted in a higher-than-planned surplus of $30 million, retained to moderate future premium increases, to increase policy benefits and maintain reserves, although critic Bruce Sheppard last year questioned the size of that reserve fund.

Membership fell 1.6 per cent to 822,422 but the society's share of the health insurance market grew to 62 per cent, the overview said. More than 300 affiliated provider agreements have been struck with doctors, specialists and facilities, accounting for a quarter of all claim costs, the society said.

But attempts failed during the year to find ways to reduce premiums for 90,000 society members aged 65 or older. Sheppard said not enough people had responded to the call for change so if they did not care enough to take the time to make their views known, he could not further the issue.

The society formed a special committee, of which Sheppard was a member, to examine issues.

•Southern Cross Health Society AGM, 7pm, Thursday December 6, Ellerslie Event Centre, Auckland.

Health insurance

* 1.3m Kiwis have medical insurance.
* Southern Cross is the biggest provider.
* It has 822,422 members, 61 per cent of market as at October.
* 90,000 members are aged 65 and over.
* 568,018 have been members for less than 20 years.
* 165,716 have been members for 20-29 years.
* 17,175 have been members for 40 years or more.
* ASX-listed NIB is buying Tower Health.

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a1 at 20 Oct 2014 18:24:00 Processing Time: 342ms