Southern Cross is staring at an estimated $10 million annual loss after bad publicity over its claims-processing fiasco forced it to delay premium rises for older members.
About 80 per cent of Southern Cross members' premiums will rise from August 1, those of older members byup to 72 per cent .
Chief operating officer Mike Ashby said operating losses to the end of May stood at $10 million - roughly the amount the insurer will have to use from its reserves to cover its deficit for the June 30 year.
"The operating loss is due to the deferral of the price increase," said Dr Ashby. "It was intended to do that on April 1. We postponed that to August 1 when it became apparent that the work involved in putting that together was more substantial than we had scoped.
"It is obviously not something we're comfortable with, but the reality is we deferred the price increase, which is why our income is lower than budget."
In the past, the country's biggest health insurer has subsidised premium rates through its retained earnings.
PricewaterhouseCoopers warned Southern Cross directors last month that it was imperative premiums were restored to a level sufficient to cover the amount being paid out to meet members' claims.
Southern Cross' reserves stood at $222.4 million at April 30, but the amount of liquid assets has deteriorated by $10 million since December last year from $196 million to $186.7 million.
