Insurance for the greater good

New Zealanders often take pride in our notable rankings on the world stage, whether it be our privileged political freedom, our happiness, sporting achievements, low levels of corruption or topping the World Bank Group’s ‘ease of doing business index’ two years running.

While these rankings shine a positive light on our small and nimble country, we are not performing as well when it comes to insurance. In fact, according to OECD calculations, New Zealand is amongst the most underinsured countries in the world.

We have an aging population, and with more and more people relying on our public health system, the burden on hospital waiting lists and welfare services will continue to grow.

Insurance plays a critical role in reducing this burden, a societal contribution that I would really like better understood. Last year Sovereign paid out more than $350 million in claims, including more than $11.2 million in claims for mental health related conditions. While we’re proud of the role we play in our community, imagine if the number of our customers – and therefore, claims – could double, or even triple. That would take huge pressure off the public health system and free up waiting lists and medical resources for those who really need them.

So why are New Zealanders so reluctant to cover themselves and their families for the worst that might happen? There are a number of reasons, and various ways the industry and other business leaders can help move the dial.

For starters, many people don’t fully understand how insurance works or why they need it. Insurance products can be complex – that’s why we are doing everything we can to simplify the way we communicate our products, creating digital tools for our advisers and connect with new customers via social media. We’re challenging the way things have always been done.

Financial advisers also play an important role in providing advice and support to people as well as helping their clients through the claims process. This personal, tailored service helps to build consumer trust in the industry and ensures families have the right level of cover for their needs.

Cost can also be a barrier when considering insurance, which is why we have a range of products and options to make it affordable. The reality is that insurance can protect your greatest asset, the ability to earn, if you are unable to work due to illness or injury. It also gives you access to the latest proven medical technology quickly and makes sure your loved ones are cared for after you’re gone.

I recently visited several of our customers who have made a claim, and they all told me how important it’s been having their finances taken care of while they undergo treatment and recover from illness and injury. We come into our customer’s lives during the most stressful and traumatic events, and it makes me incredibly proud to hear about the difference we’ve made to them and their families.

I believe all businesses can have a positive influence on their employees’ financial wellbeing and assist them in planning for the unexpected, whether it’s through education or access to group insurance schemes. This is the challenge that lies before the whole of New Zealand and we are certainly going to play our part to see that this goal is realised. I encourage other businesses to do the same.

There is a peace of mind in knowing that your loved ones are taken care of no matter what. It’s a level of security that I wish for more Kiwi families.

Originally published in The National Business Review.

Does private health insurance help or hinder New Zealand’s health system?

Recently I was asked whether private health insurance helps or hinders the public health system and my immediate reaction was “of course it helps the public system by….!”

But putting that initial gut reaction aside, I put myself into the shoes of those working in the public sector and started to question whether we do in fact encourage top surgeons to move out of the public sector. Does the presence of the private sector contribute to further inequities in health outcomes?

It is generally accepted that surgeons are paid more in the private sector than in public, and it could be argued this disparity could be discouraging surgeons from working in the public sector. However, what we are really seeing is that most surgeons working in a private setting also continue to work in the public sector. Arguably the higher pay rates they can command in the private sector subsidises their public earnings, thereby keeping world class surgeons here in this country.

Retaining quality surgeons in both the private and public sectors should be a key priority for maintaining the high standards of healthcare in this country and is a way that private health insurance can support the public health system.

Private health insurance contributes more than a billion dollars to the health sector annually and this money is often used by private sector providers to partially fund the introduction of emerging technologies such as PET scanning, robotically assisted surgeries, and development of facilities to manufacture radioactive isotopes used in diagnostic imaging across both the private and public health sectors.

New Zealand’s two tiered health system does introduce overall inequities where some people are able to afford a wider range of health services than others. However, health insurance can also help to reduce inequitable outcomes by encouraging those who can afford it, to take greater responsibility for their own health needs. By paying for around half of all elective surgical procedures in New Zealand, the private sector frees up public funding to deliver greater benefits to those who cannot afford private health insurance premiums.

Overall the public health system in New Zealand does a fantastic job but does have its limitations, particularly with regards to elective procedures. Private health insurance has a place in complementing public health services by picking up some of the slack in this elective surgery area, helping to fund innovation that benefits all New Zealanders and encourages those who can afford to look after more of their own health needs to do so.