Southern Cross Medical Care Society won't be reducing the premiums it charges for insurance despite making a bumper surplus of nearly $53 million for its 2021 financial year.
But the non-profit parent of Southern Cross Health Insurance - the country's largest health insurer, says it could mean slower growth in premiums in the future.
Southern Cross' surplus was up from $32.4m in the prior financial year after a high return on its investments.
Financial accounts show its investment and other income increased from $18.98m to $39.5m over the year.
While its revenue from premiums rose from $1.146 billion to $1.28b its claims expenses also rose from $981m to $1.12b.
Chief executive Nick Astwick said with claims expected to grow by $80m in FY22, the society would not be in a position to reduce premiums.
"But a strong surplus does support our ability to slow the growth of future premiums.
"While the surplus is higher this year, it is only because of a very strong investment return. It is worth noting that over the past five years our average surplus is $17.7m."
Society chairman Greg Gent said the strong investment income was the culmination of the last five years of the society's investment activity and a well-optimised strategy but it was not likely to be repeated.
"While this year's investment income contributes funds to the group investment portfolio, which will give members confidence that the business has the means to pay future claims as it grows, such is the nature of investments that we do not expect our portfolio to repeat this performance every year."
Gent said it was pleasing to see its membership growth and strong surplus, despite another challenging year due to the pandemic.
"We are all still operating in a climate of uncertainty and so we're very pleased to have delivered such a strong result. It is precisely the overall outcome we aim for to ensure we maintain our financial strength, particularly important in these unpredictable times."
As of June 30, 2021 the society's membership totalled 887,782 - an increase of 8584 from the previous year and its highest membership in 14 years.
Atwick put the growth of its membership down to a widespread focus by people toward managing their health and wellbeing.
"More people today are focusing on their health and wellbeing and seeking assurance that they are covered for unexpected events – which is the vital role health insurance plays.
"For us, this means we are growing. Last year's increase of more than 8500 members is the fifth year in a row that we have seen positive growth and shows the great value people place on securing health assurance."
Its financial accounts show the society experienced much lower claims during the 2020 lockdowns between March and May last year and in August last year. That saw the society return $50m to its members through premium reductions.
But it then saw a higher level of claims in its year to June 30, 2021, financial year.
"The elevated claims experience, coupled with the risk of future periods of raised alert levels, introduces additional uncertainly in estimating outstanding claims liability and unexpired risk liability.
"Due to the short-term nature of the group's claims liabilities, it is assumed that the effects of the lockdowns have largely flowed through with claims experience largely returning to normal."
While the group had taken "no explicit allowance" for Covid-19 as of June 30 this year, it had made allowances for additional uncertainty in its risk margins.
It allowed a 9 per cent risk margin for outstanding claims across the society group and 8.5 per cent for its insurance division in FY21, down from 10 per cent in its 2020 financial year.
Astwick acknowledged the climate many members and corporate customers were living in and working under due to the recent Covid-19 lockdown restrictions.
"We know many people are again going through very tough times."
He said the organisation had put its hardship packages into place again as a result of the extended lockdown period.