Liberty Medical Scheme’s (LMS) Annual General Meeting and 2009 financial year report is showing the medical cover provider growing strongly into new geographical markets as a result of its merger with Medicover in January this year.
According to LMS’ Executive Principal Officer, Andrew Edwards, the merger has resulted in a streamlining of the Scheme’s administration processes, consequently keeping costs controlled and offering both improved benefits and financial stability to LMS members.
”We can now offer administration costs at a lower level than those of our main competitors, at 11.2%, showing our commitment to ensuring that the Scheme’s non-healthcare costs do not diminish the benefits that we provide to our members.”
“It is also with great pleasure that we were able to announce an average contribution rate increase for 2010 of 10.4%. This increase remains well below the industry average”, he said.
“In addition, our new Scheme ethos, ‘You Choose For You’, centres on the idea of empowering members with both information and choice. A range of nine distinctive benefit options, designed to suit a wide range of life-stage and affordability requirements, enables our members to make informed decisions and selections to suit their current and future healthcare needs.” said Edwards.
Liberty Medical Scheme is now one of the top 5 Medical Schemes in SA, with a member base in excess of 190 000. The Medical Scheme industry has experienced considerable changes in the past few years and this, together with soaring non-healthcare costs, increased competition and future proposed legislative changes, prompted the need for Medical Schemes to plan strategically for the future.
In view of this, the Boards of Medicover and Liberty Health Medical Schemes came together, as early as 2007, to discuss how best to serve the interests of their members. In 2009, the decision was taken to amalgamate the two Schemes, effective 1 January 2010.
The amalgamation with Medicover has contributed considerably to the Scheme’s financial stability with a post-merging solvency that is above 30%, significantly above the required 25% statutory industry minimum. Many local Medical Schemes’ solvency is below the required 25 industry percent and it is vital when choosing a medical cover provider that consumers ensure the company has a strong solvency level, especially in challenging economic times.
Liberty Medical Scheme has a very strong solvency ratio and high financial reserves and can promise its members both competitive and price controlled costs and long term financial stability.
These strong financial reserves act as a buffer against higher than expected claims resulting from random industry variations including unexpected changes in membership profile, very large individual claims, and multiple claims arising from a catastrophic event or an epidemic. Post its merger last year Liberty Medical Scheme’s financial reserves are looking healthier than ever.
Looking to the future, Medical Scheme size is also extremely important in terms of medium to long-term financial sustainability. A larger, more diverse set of SA members in all income brackets improves the risk profile, which can reasonably be expected to yield greater stability and results in a more predictable claims experience. This in turn translates to greater steadiness in contribution increases from year to year.
“Greater economies of scale can be achieved, with savings in areas such as Scheme administration translating to reductions in fixed costs per member. Such savings can be ploughed back into the Scheme, ensuring the continued provision of rich member benefits. In addition, greater Scheme size equates to better bargaining power with service providers, administrators and other parties, enhancing the competitiveness of our Scheme.”
In these challenging times it is significant that the Scheme retained its A+ Global Credit Rating in 2009. This can be attributed to a consistent record of financial stability of our investment portfolio, coupled with a high claims-paying ability for the benefit of the members.
Edwards adds that the Board of Trustees is excited about Liberty Medical Scheme’s future prospects for expansion. The Liberty Group has a strong brand presence in the broader financial services market and the Scheme will leverage off this to enhance marketability and sustain its growth.
With a solid administration system in place and a range of options available for members, LMS has empowered its staff and intermediaries with the capabilities and tools with which to successfully market the Scheme to existing and new members.
Edwards concluded by saying he and the Liberty Medical Scheme Board believe that the merged Scheme will be better equipped to compete in the corporate market and will achieve better market penetration into previously untapped geographical areas.
End