Southern Cross Healthcare GroupMonday 13 August 2012, 3:02PM
Media release from Southern Cross Healthcare Group
Research conducted by Southern Cross Health Society shows that,
after weighing-up the implications of a tenure discount, members
signalled they would be unwilling to pay more in premiums to fund a
discount for longer duration members.
This is one of the just-released findings of a comprehensive
project looking into recognition of long-standing Southern Cross
The Member Tenure project was undertaken following a request
from members concerned about the impact of rising healthcare costs
on premiums for older policy holders.
The project encompassed member consultation, research, detailed
data analysis and future projection modelling.
Southern Cross Chairman Graeme Hawkins said the key findings of
the project demonstrated that a discount based on tenure was not
equitable to members and would be unsustainable for the
"As a not-for-profit insurer, a discount for long-term members
would need to be funded by raising premiums for the rest of the
membership. As the membership ages, this type of discount would
have an increasing financial impact on those who don't
Mr Hawkins said the project also found that a tenure-based
discount would have the effect of increasing premiums for many
older members who signed up for insurance later in life.
"Not all long term members are elderly and not all elderly
people are long term members. If a qualifying threshold was
set at 30 years, more than half of all members aged 65 or older
would not qualify. Such an approach would mean premium increases
rather than decreases for many older members, which nobody
The project also found that the Society's long-standing members
already receive a "loyalty reward" of sorts through a higher
average level of claims reimbursements than shorter term
Mr Hawkins emphasised that the project outcome did not diminish
the concern long held by the Board and management about rising
healthcare costs and the high cost of premiums for older
"We are focused on doing what we can to moderate claims cost
escalation to ensure health insurance remains as affordable as
Health Society Chief Executive, Peter Tynan said, "An idea that
has emerged from the project is to look at extending the current
Southern Cross Low Claims Reward which allows for a 10% discount
for members who are low claimers over a two year period. Extending
the two year period would introduce an element of tenure
recognition but would ultimately reward lower claiming members. We
will explore this idea in greater detail over the coming
"The process had also highlighted the importance of providing
for health-related costs in retirement.
"Until last year we advocated for tax rebates for older members,
but Health Minister Tony Ryall has made very clear, there is simply
no money at this time to fund it.
"Going forward, we'll be talking with Government about ways to
assist all New Zealanders to access private healthcare, whether
through health insurance, health-specific savings, KiwiSaver or
The full report on the Member Tenure project outcomes is
available at www.southerncross.co.nz/boardnews.