Fresh Look at Recognising Loyalty for Southern Cross Members

2 April 2012

Fresh Look at Recognising Loyalty for Southern Cross Members

Should long-term Southern Cross members be recognised in some way for their loyalty? If so, would other members be happy to pay more to fund this?

These are just two in a series of questions the member based organisation is posing to its 825,000 members. The consultation is part of a project resulting from the Society’s 2011 AGM, where members asked the Board of Directors to look at ways to recognise members of long-standing.

One of the reasons for the resolutions was member concern over rising health care costs which directly impact insurance premiums.

Southern Cross Health Society CEO Peter Tynan said, “We are taking a fresh look at this. We are not for profit so premiums reflect the claims costs of our members, which are driven by the cost of healthcare services, and members accessing those services in increasing numbers.

“If length of membership were to be recognised in some way, we need to look very closely at how it would be funded, what the implications are for all members, and for the Society’s long-term sustainability in such a competitive industry. Our members’ views are an essential component of this process – so we have released a discussion document to seek feedback (www.southerncross.co.nz/boardnews). There are no easy answers but we’re keen to hear what members have to say.”

The document incorporates information designed to help members consider the topic – including how premiums are structured, claims and membership data, and previous loyalty studies.

This is not the first time the Society has explored the idea of rewarding member loyalty. Over a two year period from 2005, the Society returned $26m from its reserves to 130,000 long-standing members who joined prior to 1983. This was provided through premium discounts. However, expert advice at the time was that any on-going loyalty discount was difficult for the Society to justify as, on average, long-term members can claim up to 20% more than short-term members.

Mr Tynan emphasised that, as with the previous work, the current project was primarily focused on length of membership, not age.

“We think this discussion document is something all members should have a view on. We want to hear the opinions of as many of the membership and others as possible.”

Responses to the new discussion document need to be in by 30th April. It can be accessed online (www.southerncross.co.nz/boardnews), by emailing communications@southerncross.co.nz or by calling 0800 800 181.

Excerpts from the discussion document include:
• What would be an appropriate duration to identify someone as a long-term or loyal member? 31% of Southern Cross members (257,000 individuals) commenced their policy at least 20 years ago, while 11% of members (91,000) have been with the Society for 30 or more years.
• Of the 257,000 people who have been with the Society for over twenty years, 109,000 are aged 20-54, 70,000 aged 55-64 and 78,000 aged 65+. If a means of recognising length of membership were found, should any of these age groups be treated differently?
• As a not-for-profit health insurer, all premium income received by the Society is used to provide health insurance services and pay claims. If the Society was to provide a discount to one group of members, how would this be funded?

About the Southern Cross Health Society:
Established in 1961, the not-for-profit Society is New Zealand’s largest health insurer, with 825,000 members nationwide.

www.southerncross.co.nz

ENDS

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