Southern Cross trims benefits
Southern Cross has cut the range of benefits available on its health policies.
Thursday, November 1st 2018, 8:59PM 
4 Comments
The insurer will no longer provide a $30 per night public hospital cash allowance, sterilisation treatment, sleep apnoea treatment uvulopalatopharyngoplasty and $600 funeral allowances on almost all policies, as well as either cutting obstetrics allowances altogether, or reducing them.
Some policies have also removed chiropractor and osteopath treatments, while there are instances of excesses for specific treatments increasing.
The changes take effect in December.
MoneyHub analysis showed the RegularCare Budget policy will see its excess increase from $100 per claim to a minimum of $500 per claims year.
If the cost of treatment is $1000, the policyholder will pay $700 - $500 excess plus 20% part-payment contribution of $200 - and Southern Cross will cover $300. Before the change, the policyholder would pay only $300 in total.
The UltraCare and UltraCare400 policies shrink the current obstetrics allowance ($2500 per claims year) down to $1000, as well as remove a number of other benefits previously available to policyholders.
“While the reductions are not structurally significant to any given policy, Southern Cross is following an approach of offering less-for-more when the health insurance market is highly competitive,” said researcher Chris Walsh.
Chris Watney, Southern Cross Health Society chief marketing officer said the move was to manage affordability.
“We regularly review our plans and benefits to keep pace with benefit use, claims costs and other factors. This update includes the removal of some allowances, reductions to some benefit levels, changes to the excess on some plans and the way some benefits are paid," he said.
“This policy update is part of a longer-term strategy of premium affordability. We believe it’s the right thing to do for the whole of the Southern Cross membership.
“We know that premium affordability is a concern for our members. And we know that members value both the day-to-day use of their insurance, and the peace of mind that comes with knowing that the ‘big stuff’ like joint replacement, heart disease or other life-changing diagnoses are covered. Without these changes, we would have to increase premiums at a higher rate.”
He said some of the benefits were not core to health insurance, which was intended to reimburse medically necessary health services.
“A funeral allowance, for example, is not related to a healthcare service. Its removal from our policies offers an opportunity to reduce overall claims cost and their impact on premium increases. As with other health insurers in New Zealand, and health funders globally, we are dealing with claims cost increases that consistently outstrip the general rate of inflation. Last year, for example, claims costs increased by 9%, while the annualised consumer price index rose just 1.5%. This remains a major challenge."
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Comments from our readers
Some changes while disruptive have helped, skin specialists into the affiliate provider scheme did positively impact claims experience.
However, we’re past tinkering to keep premiums under control, now we are seeing things that impact cover starting to flow through.
The change to remove the $250 excess option a couple of years ago push people to $500 excess without much dialogue wasn’t well received by polish holders.
SX has a brilliant claims approach, at the same time it’s damn expensive to operate and maintain. I get the volume advantage.
But too it has a tendency to pay for things that are excluded first up. Before someone intervenes and flags it as excluded. And they don’t go back and follow up, they accept it and move on.
They have refused to date to go down the excess option on S&T like the rest of the industry, so they position themselves to maintain support for higher cost of claims at this stage of the process, which costs more than the benefits removed.
Southern Cross as an insurer have their place, however, it is behaviour like this that undermines trust, and we have enough challenge with trust in the insurance market already.
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If their philosophy is strip benefits back to make premiums affordable what's stopping them from removing or capping significant benefits in the future.
If we as advisers can't replace one policy for another one that has less benefits for the sole purpose of saving the client premium. How can a provider justify this move?
I'd really like to see this investigated further.