Russell Hutchinson of industry consulting firm Chatswood Consulting says in a blog post that his team had been unaware of the $60,000 a year benefit's removal in late 2020 until alerted by adviser Jon-Paul Hale of  Willowgrove Consulting.

Hutchinson also pointed to Good Returns' subsequent stories on the matter.

“We know that when an insurer makes changes like this one, they may not want to shout it from the rooftops,” Hutchinson says.

“We would rather that we picked this up ourselves in 2020 but, in the midst of a pandemic and regular lockdowns, this update was missed,” he says.

But he clearly found that unsatisfactory and has instituted a major review, beefed up his firm's processes, hired two new people and “invested considerably in improving how we approach insurer product changes.”

Southern Cross has said that it advised advisers in a presentation in October 2020 – Hale, who was on disability leave himself at the time, had reported back to GoodReturns that he couldn't access that presentation on the company's adviser portal.

However, Southern Cross has since reinstated the links and also provided GoodReturns with a link so we could verify the situation ourselves – normally such presentations are available to advisers only.

What Southern Cross said

Just over an hour in to that presentation, Southern Cross does clearly state that the non-surgical hospitalisation benefit was being removed, but assured advisers their members would still be covered by other benefits.

It said it was removing it “to avoid confusion” that it said was occurring and the accompanying slide said that the changes would affect only about 25 of its members

The company said the benefit was most often used for non-cancer IV infusions.

What Southern Cross failed to make clear in the presentation was that a $60,000 a year benefit was being replaced by a benefit worth $600 to $1,000 a year, depending on the type of policy, to cover non-cancer IV infusions.

Good Returns has already reported that so-called advisories sent to members at the time focused on new benefits and talked about “changes” but nowhere did the company say the non-surgical hospitalisation benefit had been dropped.

Good Returns has already reported that other companies continue to offer non-surgical hospitalisation benefits ranging from Unimed Hospital Select Plus coverage of up to $65,000 a year to Partners Life and AIA's benefits of up to $500,000 a year.

Hutchinson says he gathered his research team last week as part of ensuring that they will pick up on such changed in future.

Chatswood's review

“In our review, we will consider comments made by Southern Cross in the media that claims payable in this feature are now covered in other benefits,” he says.

“We reviewed recent Statistics New Zealand data which show many tens of thousands of non-surgical prival hospital visits, many of which lasted many days.”

Hutchinson is also calling on advisers to let his firm know about any non-surgical hospitalisation claims their clients have made on any medical insurers.

Partners Life managing director Naomi Ballantyne provided Good Returns with data showing her firm's largest single medical payout last year was $280,000 for gastrointestinal cancer treatment.

Her company's three largest categories of claim against this benefit last year were cancer, costing $12.4 million in payouts, digestive tract conditions, costing $9.1 million, and investigations and tests, costing $8 million.

While nib, which provides non-surgical hospitalisation cover of up to $300,000 a year, didn't provide any data on its payouts, Hale says nib has provided him with data.

In June this year, it payed a total of $455,000 in claim and its third and fourth lagest claims paid $81,000 each to a man aged 60 for cardiac investigation and another man aged 69 for cancer treatment. The two largest and fifth largest claims that month were for surgeries.