Monday, August 26, 2013

Notes from the Southern Cross Road Show 2013 (Part Two)

Recently one of our team attended the Southern Cross Health Insurance Roadshow. Here is part two of her experience from the event, and what the experts are saying about the current state of Southern Cross, health insurance in New Zealand, the private health care system and several forthcoming changes. For Part One, click here.

Southern Cross are going to try and implement an open contract strategy (currently being successfully practiced in the UK), which is open referral whereby members ring Southern Cross and they give a list of health care providers, this way there can be some restriction on the overpriced providers mentioned in part one as a drag on the New Zealand health insurance industry. The problem is that currently, the GP refers the patient to a specialist of their choice for whatever reason they choose. It could be that the GP thinks they are the best choice what they do, but it could also be that your GP plays golf with the neurosurgeon and he thinks he’s a great golf player. There is nothing in place in the current system to stop this from happening,. Southern Cross mentioned that unfortunately some of us can be passive and just go with what our GP says, no questions asked. How many of us actually research the specialist or ask for a portfolio? How many of us ring around for a second opinion? Also, as mentioned in Part One, people tend not to care about prohibitive costs when it is 100% covered by the insurer. They are somewhat unaware in this regard that if this problem of overcharging could be addressed, the insurance companies would have more room to lower premiums or offer more competitive rates, which would benefit them directly.

Southern Cross are implementing initiatives to counter overcharging and pass the savings on to the consumer.

In another forthcoming initiative, Southern Cross wants to gather patient information so that a Portfolio on specialists/surgeons can be available for members to actually read about the impending procedure from real people and real cases. This portfolio will divulge success and failure rates, return visits to hospital because procedures haven’t worked, infections caught whilst in hospital and all the relevant information that patients should have access to. This could save money, preventing procedures having to be repeated at Southern Cross' expense. When repeat procesures occur, it was detailed to us that getting the money returned to them involves the insurer battling ACC for medical misadventure as ACC doesn’t willingly pay over the money. Last year, Southern Cross got $6 million recuperated but this was not enough to cover the extra expenditures and costs associated with repeats of procedures.
We were informed in the presentation by Lars Bojsen-Moller that Skin Claims have risen 33% from last year, totalling 47,000 skin claims and $40 million paid out. One of the reasons for this is that GPs aren’t doing what they could be doing.  They are sending the patients to a skin specialist at a cost of $1500 when in some cases the doctors are very capable and more than qualified to carry out the same procedure for $400. When this happens many times it leads to a huge increase in costs which Southern Cross has to pay in claims.

Lars concluded his presentation with a point aiming to make us aware that some health insurance companies don’t word their policies correctly. You can think that you are covered for something but end up not being covered. This is something that clients who go it alone with their insurance have to be aware of and practise extra diligence, or use a broker such as ourselves who have the knowledge to avoid these possible pitfalls and get you just what you need. Wrapping up his presentation, Lars reminded us that Southern Cross have a lot of changes coming up, which hopefully should benefit their ability to give clients better deals on their health insurance and better care. We will keep you informed when these changes come into effect and how they might benefit your personal insurance. As always, if you have an enquiry or you want more information, send us a question at or by phone at (09) 307 8200.

Monday, August 19, 2013

Notes from the Southern Cross Road Show 2013 (Part One)

Recently one of our team attended the Southern Cross Health Insurance Roadshow. Here is her experience from the event, and what the experts are saying about the current state of Southern Cross, health insurance in New Zealand, the private health care system and several forthcoming changes.

Lars Bojsen-Moller (Chief Operating Officer - Marketing and Distribution) took to the floor first up, a really interesting, knowledgeable man, who has been around the world several times comparing the world's public health and health insurance systems. I have broken down as best as I can his hour long presentation.

·         Southern Cross has 61% of the NZ market share.
·         Grew by only .08% last year.
·         Processing 2000 claims a day at $2.8 million.
·          Southern Cross has had an A+ Claim rate for 9 years in a row.
·         Southern Cross had 12% fewer cancellations last year.
·         They have the biggest Adviser Group and were happy to report that Group Schemes were on the rise.

However, on the negative side:

Unfortunately, NZ Health Insurance overall is in decline and has been for the past 3-4 years. This is a direct result of people’s disposable income being increasingly under pressure and the amount of redundancy increases. Also, confidence in Insurance Companies is at an all time low across the board.

Lack of disposable income among Kiwis is hurting the Health Insurance Industry.

Lars spoke with much passion and at great length about a significant problem we are having with specialists/surgeons overcharging and the perception from members and the public that the more the surgeons/specialists charge, the more it must mean they are “the best”. From the statistics, this is not entirely the case. Private practitioners have made sure they have greater demand than supply and have been able to apply this for a long time, by setting their price structure high, and this is not about to change in the foreseeable future. I guess what this means for Southern Cross and the Health Insurance industry is they are being effectively caught in the middle of paying too much and keeping up with meeting member expectations. This will take a long time to remedy, the surgeons and specialists are happy, very happy actually, and the members don’t care about cost as long as they can claim 100% of their procedure, Southern Cross unfortunately are left paying as necessary for procedures that are boosted in price by surgeons and private health care providers. You can understand Southern Cross’s frustration.

The cost being charged by private surgeons is doing damage to the health insurance business, according to Lars Bojsen-Moller.

A recent survey showed most Aucklanders refused to receive private treatment outside of Auckland. North Shore people refused to even receive treatment over the Harbour Bridge. Auckland is by far the most expensive city in NZ for any private procedure and that’s because quite simply, they just can be. For example:  A knee replacement would cost $17,990 in Marlborough and a whooping $26,029 for the exact same procedure in Auckland. The interesting fact is that if anything was to go wrong in Private Surgery/Hospital you end up in the Public hospital!

A lot of Auckland Private surgeons/specialist aren’t willing to contract with Southern Cross, they are price setting and getting away with it. However Southern Cross has contracts with some affiliated providers and this is when you swipe your card and the specialist involved sorts out your prior approval etc which has been the case for quite sometime and which they are hoping to spread further throughout the health care system. If this goes the way Southern Cross wants it to, they believe it will end up helping the public and make a positive impact on mitigating the stresses involved with health insurance prior approvals.

In the next part: We'll see what other initiatives and changes Southern Cross are looking at implementing, some statistics on claims, and how these changes will affect you as insurance clients.

Wednesday, August 14, 2013

Why use an Insurance Broker?

In a self reliant, DIY sort of country as New Zealand, people can wonder why they would need the services of an insurance broker to secure their insurance instead of just going it alone. There are options available that do seem quick and easy, such as buying direct from a bank or straight from one of the big insurers. Why would you need to add someone else to this process when you can just do it all yourself?

Unfortunately, with insurance, going it alone is akin to throwing darts at a target blindfolded. If you hit the bullseye, you just got very lucky! An insurance broker is like a professional darts player, standing beside you when you can't see, with a full view of the target and all the skills necessary to get it there.

Insurance - a lot of things to consider for those who go it alone.

Firstly, everybody is different and everyone requires different things from their insurance. For some, cost is the primary factor, whilst some want the highest sum assured possible, the shortest waiting period or the most reliable cover that they know they'll be able to claim on when the time comes. Some need the best deal for a group medical plan for their family, whilst some need to insure their business and its key staff. Each of these desires requires a thorough search of the marketplace to find the best source that can fulfill those unique requirements. Most people end up settling for poor options that don't fully cover them or they end up paying more than they have to.

A broker is a professional with a unique knowledge of the marketplace and connections within the insurance industry that let them know the best options for you. They also have working relationships with the major insurance providers which lets them get deals for you that you won't be able to get yourself. If you have a broker going to work for you, your insurance could be a cost effective Ferrari instead of an over priced clunker.

Do you want your insurance to perform like this?
Or like this? 

Better yet, if you're dealing with a really good broker, you get an even broader range of service at your disposal. Not only will the broker and their admin team deal with securing you the best insurance deals, they'll also be on hand to manage your insurance, answer your questions and stay on the lookout as to whether better deals come available for you on the marketplace. The broker and their team will also personally manage your claims, taking most of the burden of forms and paperwork out of your hands during your most stressful times.

We hope you consider using a broker when you decide you need insurance. Trust us, it makes everything a lot easier!

Monday, August 5, 2013

Defining Insurance Terms

A lot of the jargon and terminology surrounding insurance can be difficult for people not familiar with the industry to understand. Worse, many insurance companies or brokers use these terms expecting full knowledge. Here is the definition of some of the most important terms you might come across when dealing with insurance.

1. Policy 

An insurance policy is a contract between yourself and the insurer. The policy provides conditions that once you fulfill, you will receive payment from the insurer in the amount agreed to when the policy is taken out. For example, a life insurance policy is an agreement between you and the insurer to pay a certain amount (called the sum assured) in the event of death. A Total Permanent Disablement Policy will provide payment once you fulfill the conditions of being unable to work due to illness or disablement for longer than a specified period of time. And so on and so forth. An insurance policy is what you pay premiums for as well as what you make a claim upon.

2. Premiums 

The price you pay to keep a policy in force. Most premiums are paid monthly, and the amount depends upon the type of insurance, the sum assured and other factors such as your age, your health or the amount of people covered by the policy.

3. Claims 

A claim is the action you take when you have fulfilled the conditions of your policy and wish to be paid out the sum assured.

4. Pre-Existing Conditions 

A pre-existing condition is a physical health or mental health condition which were already present at the time of taking out the policy. Pre-existing conditions can be excluded from your insurance coverage or can cause your premiums to be higher, as the insurance company is taking on a higher risk by insuring you.

5. Exclusions

Events or conditions that are not covered by your insurance policy. For example, in many life insurance policies there is a suicide exclusions whereby death by suicide will not result in the insurance paying out ie. it is 'excluded' from your cover.

6. Insurance Broker

An insurance broker is different from an insurance company in that a broker does not sell insurance to you directly. A broker searches the marketplace on your behalf, taking your needs and your individual circumstances into account to secure the best possible deals on the insurance policies you are looking to take out. A broker's job is to work for the client and work for their interests and not the interests of the insurance companies. Our company, Spratt Financial Services is a team of insurance brokers, operating under this definition.

7. Waiting Period 

The waiting period is the amount of time (agreed upon at the time of taking out the policy) which must pass after an event before you can collect your insurance benefit. For example, in an income protection policy with a waiting period of 4 weeks would mean that you will receive your agreed upon benefit from the policy 4 weeks after being rendered unable to work by illness or disability.

8. Living Benefits 

This is a feature that can be included in life insurance policies that allows you to receive payment on your life insurance before you die under certain circumstances. Usually, these involve diagnosis of terminal illness such as cancer or the need for specialised care.

9. Waiver of Premium

A feature that can be added to an insurance policy that will ensure that your insurance remains in place and active if you fail to make premium payments due to illness or disability. The waiver of premium will usually remain in effect for as long as you are disabled and unable to make premium payments. This feature will cost an additional premium.

10. Qualifying Event

An occurrence that triggers your insurance payout or claim. For instance, a death in the case of life insurance or a surgical procedure in medical insurance.