Southern Cross reveals top claims, and more daily news

Southern Cross has revealed that spinal fusions was the most expensive surgical claim in the year to 30 June 2021, with the most expensive claim costing $222,000. Radical neck dissection surgeries were the next most expensive claims. The three most common claims made were for cryotherapy procedures (34,000 claims), excisions of skin lesions (31,000 claims) and minor surgery performed by a GP (26,000 claims). In the year ended 30 June 2021, Southern Cross paid more than three million claims valued at $1.12 billion.

“Surgery for bad backs has topped the list of most expensive surgical claims funded by Southern Cross Health Insurance (Southern Cross) in the year to 30 June 2021, with the highest individual claim coming to $222,000.

Eight of the top 10 most expensive claims paid by New Zealand’s leading health insurer were for spinal fusions - surgery which permanently connects two or more vertebrae in the spine – with four claims topping a whopping $200,000.

Southern Cross Chief Medical Officer, Stephen Child, said that the expense and volume of these claims demonstrate the value and benefits of health insurance.

“Whether you require expensive surgery such as spinal fusion, or if you are one of thousands needing a more common procedure, such as the removal of a skin lesion, Southern Cross members can have the assurance they are covered for unexpected events.”

The next two most expensive claims were for radical neck dissection surgery, which involves the removal of cancerous tumours, with each claim totalling more than $150,000.

Child said spinal fusion is a highly complex procedure and therefore can be very costly.

“Spinal fusion surgery is a very serious procedure that’s typically performed by an orthopaedic surgeon or a neurosurgeon. Often it involves the implantation of extensive metalware and artificial bone, which results in additional cost and expense.”

Southern Cross is a not-for-profit Friendly Society which operates solely for the benefit of members. For the year ended 30 June 2021, it paid more than three million claims valued at $1.12 billion

When looking at what were the most common claims paid by Southern Cross, the highest by volume was cryotherapy procedures (34,000 individual claims), followed by excisions of skin lesions (31,000) and minor surgery performed by a GP (26,000).

Cryotherapy breaks down skin lesions or skin abnormalities at the site through freezing. A skin excision procedure involves the cutting of abnormal tissue away from healthy tissue.

Colonoscopies, which look for signs of bowel cancer and investigate causes of pain, bleeding or changed bowel habits, were the fourth most commonly-funded procedure, with 23,000 claims paid by Southern Cross.

“Given the high incidence of skin cancer in New Zealand, it isn’t surprising skin lesion removal is one of the most common procedures we fund,” Child said.

Although the individual claim costs can be high, Southern Cross Health Society’s Affiliated Provider programme has helped to dampen rising healthcare costs, achieving more than $220 million of savings for members through the programme since 2012.”

Top 10 most expensive individual claims in FY21

Procedure

Total paid

Spinal Fusion

$222,000

Spinal Fusion

$210,000

Spinal Fusion

$201,000

Spinal Fusion

$200,000

Spinal Fusion

$179,000

Spinal fusion

$175,000

Radical Neck Dissection

$170,000

Radical Neck Dissection

$156,000

Spinal Fusion

$156,000

Spinal Fusion

$153,000

Top 10 procedures by volume in FY21

 

Procedure

Description

Number of procedures funded

Cryotherapy of Skin Lesions

Liquid nitrogen treatment to freeze and destruct an abnormality.

34,000

Excision Skin Lesion

Cutting out abnormal tissue away, usually related to cancer.

31,000

GP minor surgery

N/A

26,000

Colonoscopy

An exam used to detect changes or abnormalities in the large intestine (colon) and rectum.

23,000

Intravitreal injection

An injection or shot of medicine into the eye.

10,000

Nasendoscopy

A test to look at the inside of the nose, the throat (pharynx) and the voice box (larynx).

9,000

Biopsy of Skin and Subcutaneous Tissue

A procedure to remove cells or skin samples from the body for laboratory examination.

9,000

Cataract extraction and insert IOL

Removal of cloudy lens in the eye and replacement with artificial IOL (intraocular) lens.

8,000

Gastroscopy (+/- Biopsy / Polyp)

A procedure to examine the upper part of the digestive system.

7,000

Removal of Teeth

N/A

6,000

In other news

Cigna: Gabe Smith new chief architect

Cigna: David Marquis to become head of data


Quality Product Research: QPR database update V145

Quality Product Research works continually to update our product ratings. We have just distributed the QPR Database V145 to subscribers which includes the following changes:

 

* Medical Exclusions Major Review - all insurers

* Partners Life - new policy document effective 12/07/2021

> Income & Expenses Cover and Moderate Trauma rated

> Enhancements effective 12/07/2021

 

* AIA enhancements to Trauma & IP/MP effective 23/07/2021

* Pinnacle Life - new policy document loaded

> Life: no rating changes

> IP: no rating changes

> TPD Any Occ Accelerated rated

> Trauma: minor rating changes

* Reviews:

> Trauma

- Osteoporosis re-rate for all companies

- Asteron - Trauma Reinstatement replaces continuous Trauma in TBB

> IP/MP

- Total Disability Class 1&2 5yr for PL

> Life

- Financial Planning & Legal - re-rate for all companies

- Grief and Funeral Support - re-rate for all companies

- Business Future Insurability (optional) added to PL


Quality Product Research: Proposed rating for Financial Planning & Legal Advice

Introduction

We have recently conducted a full review on our “Financial Planning & Legal Advice” item. Please find the new sub-items below.

Proposed sub-items

FInancial final

Notes

The Financial Planning & Legal Advice benefit differs between insurers with a significant weighting on whether the company offers reimbursement on legal expenses. Fidelity is one of the major insurers who doesn’t offer this, and customers are only eligible for payment if their Life cover sum insured is over $100,000. Similarly, Momentum Life requires 3 years continuous cover before payment eligibility.

Another item worth mentioning is Asteron, Fidelity and Westpac directly stating that the benefit will be paid out to all policy owners – the maximum amount paid by most insurers is $2,500 so this particularly feature seems to reduce the value of the benefit.  

Your feedback

We value getting your feedback on how these wordings are being applied to claims you may be aware of. Please email us with details of any recent claims to help us update our understanding.

Doreen Dutt, Research Analyst, Quality Product Research Limited, researcher@qpresearch.co.nz


Quality Product Research - Grief & Funeral Support (Part 2)

Following on from our previous blog on the proposed rating of Grief and Funeral in Life cover, we have added a new sub-item to show that Cigna does have a counselling benefit which is only available within three months of a counselling session. 

The total definition score for Cigna remains at 90 however this was an important correction for when we roll our our new detailed head to head reports which will display our sub-items. 

Part 2

Your feedback

We value getting your feedback on how these wordings are being applied to claims you may be aware of. Please email us with details of any recent claims to help us update our understanding.

Doreen Dutt, Research Analyst, Quality Product Research Limited, researcher@qpresearch.co.nz

 


Income protection concerns for the self-employed and other daily news

In the UK, where the gig economy is more developed than it is here, policy makers are worried that varieties of social protections designed for full-time employment are not going to work so well in the 2st century labour market. These include pensions (to us, superannuation), holidays, and insurance. Income protection in particular is under the spotlight because, at the same time as self-employment is growing rapidly, it seems that income protection is shrinking rapidly. Income cover has become more and more restrictive for the self-employed as insurers have grappled with long-term claims with hard-to-pin-down signs and symptoms. This sounds familiar. In fact, it sounds like our future if the APRA changes mandated to ensure the sustainability of income protection eventually end up being adopted here. The essence of the problems with income protection for the self employed is a lack of flexibility in the product. That is exactly what insurers are struggling with too. If both want more flexibility it looks like there is room for a new kind of IP product for the self-employed. 

Other daily news

Fidelity Life rolled out August Lockdown mix-tape on Spotify – some fun and simple initiatives for people working from home. Link here: https://www.linkedin.com/posts/fidelity-life-company-ltd_august-lockdown-mix-tape-activity-6836487685444636672-OcWj

Fidelity Life has advertised a new role for Head of Risk and Operational Compliance. More info and the Seek.co.nz link here: https://www.linkedin.com/posts/angelareddy_head-of-risk-operational-compliance-job-activity-6835715862239031296-rVZJ

Asteron Life providing product innovation by listening to customers and advisers. Link here: https://www.linkedin.com/posts/asteron-life-limited_asteron-life-supporters-for-life-activity-6836047658919055361-Y_3g

Stuff published a handy guide to the interaction between ACC, health insurance, and harm if you get an allergic reaction to the vaccine against COVID-19 (a very rare eventuality, but there are some instances of this). Essentially, you are covered by ACC and your personal health insurance is unaffected. Link


Cancer treatment in New Zealand and the need for diagnostics cover

Several advisers have shared this article about a woman's journey to get a cancer diagnosis. On Tuesday night I sat through a harrowing personal account of a man who cancelled medical insurance shortly before his wife started experiencing symptoms similar to those described in the article. Like the woman in the article, he related a story about his wife having trouble being taken seriously by their GP. I know that this must he hard for GPs. I also suspect that we may not be doing enough tests. The video tells us we do not fund enough cancer drugs. Like the woman in this article, the man I spoke with wished he had acted earlier, and if they had retained their medical insurance, maybe diagnosis would have been quicker. Unlike this woman, who has private treatment and is still fighting her cancer battle, his wife died. He blames himself. It's rough, but watch the video. I prescribe it for anyone contemplating cancelling their medical cover. 


Quality Product Research: Proposed rating for Osteoporosis

Introduction

We have recently renamed the “Osteoporosis” item to “Early Onset Osteoporosis” to reflect the severity-based definition that insurers use and a common limit of payment to those aged under 50 years old. 

Sub-items rating review

Osteon new

Notes

A noticeable difference is the fact that several insurers do not offer this benefit once the insured is over 50. Though osteoporosis among those younger than 50 is considered rare, a study conducted at the University of Arkansas found that it's a greater risk than most women realize. From information on 164 college-aged women, 2 percent had bone densities low enough to be considered osteoporosis, and 15 percent were low enough to be in the osteoporosis risk range. To read more on this click here. Nevertheless our previous penalty for the limitation on age was far below the level of cases that this probably removes from the claims pool. So we have increase the penalty from -10 to -75. 

This is also a great example of how our methodology, specifically the  “Amount Score” (one of four) comes into play, to highlight the different payment amounts made by insurers. Please note, Asteron Life only offers cover for Osteoporosis with their “Early Trauma Benefit” similarly with AMP products you will need to select the Plus Options. These are all available in your “Product Settings” on Quotemonster.

Your feedback

We value getting your feedback on how these wordings are being applied to claims you may be aware of. Please email any claims information you have regarding this condition.   

Doreen Dutt, Research Analyst, Quality Product Research Limited, researcher@qpresearch.co.nz


nib launch Kids Cover Free, and more daily news

nib announced the launch of Kids Cover Free, a new nibAPPLY platform campaign. Kids Cover Free is intended to help New Zealanders prioritise health by offering a free base cover for a child under 21 for 12 months with every adult insured under a new Easy Health, Ultimate Health or Ultimate Health Max policy through nibAPPLY. The offer is available through nib’s adviser partner network. nib CEO, Rob Hennin, has said that the offer reflects nib’s mission of improving the health of New Zealand families. Hennin also highlighted that the campaign is intended to improve the peace of mind of parents. The campaign is valid from today until 31 October 2021.

“Leading health insurer, nib New Zealand (nib), has today launched a new campaign via its nibAPPLY platform, to help Kiwis better prioritise the health of their families. The Kids Cover Free offer is available through nib’s adviser partner network and provides free base cover for one child for 12 months with every adult insured under a new policy.

nib Chief Executive Officer, Rob Hennin, said the special offer reflects nib’s mission to support the better health of Kiwi families and aims to provide members with greater peace of mind, knowing their child’s health is cared for.

“As a parent, taking care of the health and wellbeing of your children is one of your greatest priorities, and biggest concerns. We know from our own 2020 State of the Nation Parenting Survey, that at least three-quarters of Kiwi parents are more mindful of their family’s physical health because of COVID-19,” Mr Hennin said.

“Investing in private health insurance for your children is one way parents can significantly reduce these sorts of stresses, giving them the peace of mind that their child’s regular check-ups or unexpected healthcare needs are likely to be covered and that they’ll have access to timely and efficient care. We hope our Kids Cover Free offer helps take this burden off Kiwi parents, especially after a really difficult year,” he added.

Research from BNZ in 2018 estimates that the average cost of raising a child in New Zealand is just under $16,000 annually or around $285,000 up until the age of 18. Furthermore, IBISWorld uncovered that childcare, clothing and footwear costs had increased by up to 60% from 2013/2014 to 2018/2019.

nib’s own claim statistics also show that the number of healthcare claims for children has increased by 5% in the past 12 months* at a cost of more than $10 million.

The most common claims for children during the period* were:

  • Specialist services (consultations including seeing a dermatologist about skin issues such as eczema, dermatitis or an ENT specialist due to tonsils or ears issues) – 3,500 claims, totalling $915,000
  • Treatment by General Practitioner – 1,300 claims, totalling $45,000
  • General diagnostic –700 claims, totalling $205,000

And individual claims for children can be quite large. nib’s three largest claims for members under the age of 21 during the period* were:

  • Fusion to treat scoliosis - $90,000
  • Jaw surgery - $69,000
  • Electrophysiology and ablation to treat racing heart and restore normal heart rate - $58,000

“We know raising a child doesn’t come cheap, even more so if you’re faced with the need to pay for unexpected healthcare costs out of pocket. Common conditions such as grommets can often set parents back between $2,200-$3,500 and wisdom teeth extraction can cost on average $3,500 - $5,200.

“Making sure your children are insured early means that many of these conditions may be covered, as they have a policy in place before they become pre-existing conditions - which are excluded from most health insurance policies. That’s a huge benefit and one that enables parents to provide greater certainty around their child’s access to quality healthcare for the future,” Mr Hennin said.

The Kids Cover Free is valid for one designated child (under the age of 21) per every adult insured under a new nib policy between now and 31 October 2021. The offer which applies to base cover only is applicable for new members who apply for nib’s Easy Health, Ultimate Health or Ultimate Health Max policies through nibAPPLY (usual underwriting conditions and terms and conditions apply).

In addition to the special offer, nib also provides child only cover options for families looking to cover just their children.

For more information and to view the terms and conditions advisers can visit nib.co.nz/adviser/ or contact their nib Adviser Partner Manager.” Click here to read more

In other news

Lifetime: Once in a lifetime business - Take two

Medical Assurance Society: Do insurers fully understand the realities of customer vulnerability?

RBNZ: Reserve Bank's stress testing plans for insurers revealed


A failure of product design - TPD benefits

Several advisers have been writing to me over the last few months with issues with TPD benefits. I have also conducted a review of TPD benefits recently for a client. Several aspects of TPD design have come into focus through the process. Two that stand out are variations in loss of independent living features, which are usually based on activities of daily living (ADLs).

Almost all companies have five activities. At first glance these appear very similar. Closer inspection shows differences. The first is that the walking definition of some is not fulfilled if the insured person can get about in a wheelchair, whereas with others it is fulfilled if the insured has to use a wheelchair. The second difference is that independent existence requires the assistance of a person to help the insured, which is not fulfilled if technology can help. 

Although I have not done the research, I am willing to bet that consumers believe that if you are confined to a wheelchair that would indicate a claims payment would be made. In fact, to be fair, it probably does pay out most of the time: as in most cases the claim would qualify under other factors. But claims do exist where the decision will hinge on this one fact - and I think consumers would expect the cover to consider you sufficiently disabled if you needed a wheelchair to get about (assuming the other conditions were met, of course, such as this being permanent - not merely temporary). In fact I saw the details of one such claim yesterday. Likewise with technology: the rapidly improving situation with technology means that someone who could not walk at all may be able to buy a set of robotic legs that enable them to walk. Here are examples: on in the US, another using technology developed here in New Zealand

Individually these are interesting issues - and should be resolved - but collectively they indicate both a communication and product development challenge. The communication issue is how we get across to customers what we mean by loss of independent existence. We cannot simply allow a situation to exist where we allow our different perceptions of what is meant to exist. At best, that's simply too sloppy,  at worst, if it is done knowingly, then its a form of misrepresentation of what the product does. The product development challenge is to work out what consumers need and deliver a product that does that. Robot legs do not come cheap - I suspect that consumers want a policy that will pay for them, not fail to pay out because of them. In product design that means some hard work has to be done. That means literally testing scenarios and descriptions and working out what level of cover is needed, how to communicate about that cover, and building the wording and pricing up from there. Then launching that and successfully demonstrating how much better that product is compared to the rest. There is definitely room for improvement. 


Detailed schedule of Partners Life Product Changes and Benefit Improvements

Partners Life Product Changes and Benefit improvements 

Special Events Increase benefit limits increased from 75% to 100% for aggregated sum insured and new special event added

Counselling Benefit increased “use by” time to 12 months after claim

Financial and Legal Advice Benefit increased “use by” time to 12 months after claim and the maximum benefit increased to $3,000

Special Events Increase deal on offer to customers who missed policy anniversaries. Customers will have a have an additional 12 months added to their 60-day time limit that applies to their immediate past anniversary

Dependent Child Funeral Support Benefit updated to include unborn child age moving to 20 weeks or weighing more than 400 grams

Bed Confinement Benefit added under the daily care of a registered nurse as an alternative requirement

Alzheimer’s Disease, Dementia, Aplastic Anaemia, HIV (medical acquired), Multiple Sclerosis, Major Organ Transplant, Diabetes definitions changed in Trauma Cover

Non-surgical Benefit (Private Hospital and Serious Illness Benefits) annual limit increased from $300,000 to $500,000

New Public Treatment Top-Up Benefit means Partners Life will pay for some treatments after customer has covered treatment in public system.  

$5,000 maximum limit removed for Second Opinion Benefit (Private Medical Cover)

New cover for mental health consultations has a maximum of $2,500 under Surgical and Non-surgical Benefits (Private Hospital and Serious Illness Benefits)

Optional Specialists and Test now includes Podiatrist as a specialist for consultations

Cancer definition simplified in Excess Waiver Benefit.

 

Income and Expenses Cover

Income and Expenses Cover is designed to include sustainability features, remove over-insurance and moral hazard opportunity, and provide customer support

Benefit is the greater of pre-disability income less offset x 75% of life assured’s share of pre-disability monthly domestic expenses

The cover term for Income Cover and Expenses Cover is to age 65 with payments term options of 2 years, 5 years and to age 65

Pre-disability income is the same as Income Cover

Disabled for occupation classes 1-4 includes 10 hours or 75% of activities but it moves from own to reasonable occupation after 12 months

Customers will be considered to be in occupation class 5 if they have been unemployed, on unpaid leave, working less than 25 a week, incarcerated in a penal institution, or legally barred 12 months before disability

Income Cover offsets apply to Income Cover and Expenses Cover

Income and Expenses Cover has a payment term restriction that applies for medically unevidenced claims. These are not a fixed restriction for mental health claims

Unevidenced claims in the Income and Expenses Cover are paid for up to 12 months

Fixed payment terms reset for new disability for the Income and Expenses Cover, although customers must be back to full time work for more than 12 months to reset.

Disability within 12 months of claim for any reason is a recurrent disability

Income and Expenses Cover ancillary benefits include Bed Confinement Benefit, Return to Work Benefit, Increasing Income Benefit, Recovery Support Benefit (reduced to 6x SI), and Vocational Retraining and Rehabilitation Benefit (reduced to 3x SI or max $10,000)

Income and Expenses Cover ancillary benefits don’t include Lump sum TPD, Critical Illness Benefit, Specific Injury Benefit, Child Care Assistance Benefit, Death Benefit, and Return to Home Benefit

YRT option only applies.

Moderate Trauma Cover

Partners Life desires to get back to the principle of indemnification meaning that customers don’t need claims paid unless they have financial losses, and they don’t need to pay premiums that doesn’t indemnify against loss

Moderate Trauma Cover allows price efficiency, cutting out claims with immaterial financial consequences. This enables customers to afford higher sums insured.

Moderate Trauma Cover will mean future prices will be sustainable and will allow advisers to fine tune severity based on trauma solutions

Moderate Trauma Cover will have more defined conditions for Alzheimer’s Disease, Dementia, Aplastic Anaemia, Angioplasty, Blindness, Cardiomyopathy, Chromic Kidney Failure, Cancer, Diabetes, Heart Attack, Intensive Care, Loss of Cognitive Function, Motor Neurone Disease and Muscular Dystrophy, Multiple Sclerosis, Severe Rheumatoid Arthritis, Stroke.

Designed to be 20% cheaper than Trauma Cover (TC), price differential expected to grow

Designed to be a mid-range trauma cover (between TC and Serious Trauma Cover)

No built-in TPD, customers that need TDP will need to take TPD Cover.

Moderate Trauma Cover can be combined with TC and STC to create a severity-based trauma option.