Some watching may have noticed that updates here have been a bit sparse. There are some good reasons.

Some of them are claims, and there are lots of claims. Two years ago, we managed about 85 claims for the year, mostly medical claims.

2022 that ticked up markedly with Covid and the Public Health system struggling.

 This year in six months, we received over 200 claim notifications and had 165 claims land on the desk. Again mostly medical, but also more difficult and serious than we had been seeing.

Up until late August, I put this down to the challenges in the public system: not enough doctors and resources, and things being left longer and thus more serious to treat.

The challenging problem!

That was until I discovered that Southern Cross had removed a benefit from policies announced in October 2020 and effective January 2021, along with a raft of other changes that were positioned as improvements. Maybe not!

• The benefit being removed was non-surgical hospital coverage; the $60,000 benefit was replaced with a $750 per annum IV infusion benefit, for those on Wellbeing plans, a bit more for UltraCare at $1,000 and less for Kiwi & Regular Care

Now, that may not have any impact on most people; they don't do advice on medical insurance and understand the mechanics, and the likely reaction to that is, "So what?"

The "so what" is a new treatment to the NZ private hospital system that is MedSafe approved and Pharmac funded isn't going to automatically be covered and paid for by Southern Cross. Not to mention the existing people that were impacted. Southern Cross says it's not big, but it certainly is to those who had the cover and were using it!

• For clarity, this is not new experimental medicine and treatments; they are the ones MedSafe hasn't approved and Pharmac hasn't funded.

The problem here is we don't have clear data on the impact of this change because the insurer concerned not only drew a line through it but also won't be collecting the details of those it says, "No, this is no longer covered"

The real issue!

Confidence and trust. The real issue here is confidence and trust.

• Confidence that the policy you have will be there to take care of your future medical requirements.
• Trust that your insurer will treat you fairly and not take away benefits that you had when you took the cover.

Since the issue of communicating these changes broke in September 2023, further investigation has shown that Southern Cross intended to distribute an additional changes and amendment communication to policyholders, but it appears to have dropped off somewhere.

• It was not included in the communication to policyholders
• It was not posted on Southern Cross' website
• And it was not provided to the research providers that provide product research to advisers.

This is in contrast to well-communicated policy changes and amendment delivery for the 2018 changes they made.

The communication on this was:

Administration of non-cancer IV drugs change

IV infusions for non-cancer indications were previously covered under specialist consultations or the non-surgical hospitalisation benefit. They are now covered under the separate IV infusions (non-cancer) benefit, which provides up to $1,000 per claim year for Medsafe-indicated drugs.

One problem I have with the communication that did go out was that they hyped up a new benefit as an addition and missed telling people the big bit was being removed. They relied on the removal of non-surgical hospitalisation being read and discovered in a sub-document that wasn't provided.

• The additional challenge is Southern Cross also maintains an extensive list of excluded procedures, which I don't have historical visibility of, and I can't tell you what has been added or removed over the years either. 

The cold harsh truth is we don't know the impact of Southern Cross removing benefits, but we do know about 70% of people who have medical insurance have a Southern Cross policy.

• We also know that somewhere around 25-30% of the population have medical insurance. 
• If we do the math, we have around one million people impacted by this change across the country. Southern Cross has since stated in its annual report that the number is around 900,000 people insured.

Now, if this is what has happened, and we can't quantify Southern Cross's impact, can we look elsewhere for the answers?

Claims experience:

• From my own claims experience, I know that from 2021 to now, there has been a significant increase in medical claims.
• We also know that public health and hospitals have been stretched too.
• We also know we have staff shortages and not enough clinical staff, both to meet demand and to replace those who have left overseas.
• And all of the insurers we deal with have been telling us they are slammed with claims too. Something like an extra $500,000,000 in medical claims is expected this year.

We look to Covid and blame Covid, we also look at politics and immigration. But is it just that?

• Is the problem a case of Southern Cross ceasing to cover people for things that they needed creating a massive demand on the public health system leading to what we have seen?
• Southern Cross will not be the sole cause; those other things do contribute.
• However, the combination of all of them with the extra load from no-where may have been the precipitating event that has driven the wider failure to cope we have seen with Public Health.

Without hard data, we can't be sure. At the same time, I'm often not too far off the mark with this stuff. I may be mistaken about some of the details, but I'm not often wrong about the core levers and drivers of the resulting situation. 

TL;DR

Long story short, if you have medical insurance and you are with any provider other than nib with Ultimate Health Max or Major Medical Deluxe, Partners Life's Private Medical Cover, or AIA's MajorCare issued before October 2003, you have problems in your coverage that you are not aware of, and we can assist in solving them. 

If you are interested in the media coverage of the Southern Cross issue I found, you can read more in these links

• 1 September 2023 Southern Cross drops $60k benefit by stealth
• 8 September 2023 Other health insurers are much more generous than Southern Cross
• 9 September 2023 My Article - Burning down the house 
• 13 September 2023 Industry researchers also in the dark on Southern Cross benefit
• 14 September 2023 FMA aware of but won't comment on Southern Cross benefit removal 
• 26 September 2013 Southern Cross to review communications after debacle over withdrawn benefit (I'll call this a win, though it is full of spin)

The frank reality, as advisers, we cannot have insurers behaving like this, it undermines the public confidence and trust in what we do, and it undermines the advice promises we provide with the insurance contracts we recommend. 

Despite now finding that Southern Cross did, in fact, have a communication of the changes intended but failed to deliver, it closes the loop on the initial concerns about changes not being notified. It's still bad, just not as bad.

1. The documents not going out appear to be a mistake. At the same time, Southern Cross's resulting approach and behaviour justifies the concerns about their conduct that were originally raised. 
2. If a provider is going to behave on an issue they mostly had right but screwed up, how are they going to behave when they really get it wrong?

Hopefully, Southern Cross has learnt from this scrutiny and will do better in the future. You can be sure I'll be watching.

While I have the ability and energy to bring these things to light, I promise I will. I'm here to look after people and support them, not screw them over in their hour of need. 

 What can you do as a Southern Cross policyholder?

• Call them, write to them, and make yourself heard. Southern Cross says they are there for their members, so make sure they hear from you as a member.
• You can also make a complaint to the Financial Markets Authority, this link is their complaints page
• If you are not satisfied with Southern Cross's response, you can also lodge a complaint with the IFSO, the independent complaints body to which Southern Cross belongs.

Further to all of this, Southern Cross continues to post changes to their excluded procedures website page without communicating this directly to policyholders. Exclusions are part of your policy contract, and changes need to be notified to policyholders. Relying on policyholder checking the website exclusion list is a step too far on policy requirements.