Southern Cross Healthcare is financially strong, an independent review said today.
The review was conducted by PricewaterhouseCoopers for the troubled health insurer whose clients have waited months to have claims for health care settled.
PricewaterhouseCoopers said in their review: "The current difficulties that Southern Cross has experienced with timely claims processing areattributable to systems deficiencies and do not reflect any inability to pay such claims."
However, the review said it was imperative that Southern Cross raise premiums.
"Southern Cross is presently experiencing underwriting losses, reflecting the fact that the combination of claims expenses and operating overheads is exceeding the current level of premium income.
"This position cannot be sustained indefinitely without eroding reserves to the point where prudential margins would be jeopardised."
It was therefore "imperative" that Southern Cross raise premiums "so they are restored to a position at least commensurate with the level of claims being made by members".
This would be a continuing process, meaning further premium increases would be needed at future intervals to cover projected increase costs - of members' medical and surgical claims.
"Furthermore, because premium increases have been deferred, premium increases in the short term will need to be, in some cases, substantial and should be aligned as far as practical with actual risk experience."
