2020 AGM CEO Address, Simone Tregeagle
It is a great privilege for me to lead this organisation through this period of its history, and to present to you on the performance and operations of the fund for FY20.
2020 has been a time of great change and challenge, even for an organisation that has seen much in its 130 years.
For those of us charged with managing the operations of the business, the most distinctive aspect of the year has been the COVID-19 pandemic.
Having started the year supporting our members in bushfire affected areas, our attention quickly turned to the unprecedented prospect of entire cities and countries being locked down to avoid the spread of coronavirus. And it was only a matter of weeks between the time we first saw this happening around the world and when we were sending our own team home, and into a future that we had no way of foreseeing.
At that time there were four significant concerns on my mind.
First, could we run the business reliably, securely and seamlessly from not three office locations but from more than 80 staff homes?
Second, would we lose significant capacity through staff becoming ill with the virus?
Third, how would the virus impact our members and how could we support them?
And finally, would the health and economic impacts in the community and among our membership cause such significant membership losses or claims costs that the business would be at risk?
At the very heart of a mutual organisation is its mandate to maximise benefit and value for its members, and this year provided a unique opportunity for the fund to do that.
As the COVID-19 shutdowns were closing workplaces across the country we were able to defer our usual
1 April premium increase for six months, giving a small reprieve to all members from increasing costs at an uncertain time.
We were able to offer premium waivers for those members most affected by job and income losses to help them maintain their health cover at a time when it might become more important than ever.
We changed members’ ability to suspend their cover and resume it when their circumstances allowed.
And in addition, the rt Families Foundation, the charity run by rt staff, made $50,000 in grants available for members and others in our community.
For the health and safety of our staff and members we continue to operate in a work from home environment today and are pleased that we’ve been able to give our staff and their families the certainty and safety of being able to work from home.
The fact that the fund has been able to achieve a sound operating performance, to manage the unexpected and previously unexperienced, and to deliver many improvements for members despite the challenging circumstances has been extraordinary.
I am incredibly grateful for the expertise, resilience, good grace and good humour of my executive team and every member of staff. What has bound us together throughout this time has been a single-minded focus on ensuring that we continued to be there for our members, without disruption, any time they needed us.
The underlying results for FY20 have been positive and the short-term financial position of the business is sound. The Group recorded an underlying surplus, after tax of $2.5m for the year.
Alan has already mentioned some of the challenging characteristics of the private health insurance sector, and we have not been immune to their affects.
Our membership is slowly declining as is the average premium paid per member, as people understandably look for lower cost cover options to help improve their ability to keep their health cover. We saw a 4% decline in rt health membership in FY20 and a growing number of members downgrading to lower levels of cover, resulting in a 2% reduction in premium revenue compared with FY19.
We have benefited from the results of a significant focus on operational cost savings over the past couple of years, which delivered a $1.8m reduction in underwriting operating expenses. But we continue to see the cost of claims increasing both through increased utilisation and increased cost per claim, reflecting the cost of health care services.
The year saw a number of large changes and transactions, aimed at strengthening the capital position of the fund, both for today and in anticipation of future capital requirements under forthcoming APRA standards. These included the sale of the Surry Hills and Brisbane properties, the permanent closure of our dental and optical clinics, and of our Brisbane and Charlestown branch offices.
But there have also been a number of service and benefit improvements introduced for members during the year. Among them, a new preferred dental provider arrangement with a national organisation that can offer members gap-free preventative dental in 60 locations, giving value to many more members than we were able to through our own two dental practices.
A new claims app was launched making it fast and simple for members to submit claims and removing the need to complete forms and post paperwork.
Two new cover options were launched, responding to members’ needs and this year’s premium increase, at an average of 2.9%, was our lowest in close to two decades.
During the year, our team completed health cover checks with more than half of our members helping people make sure that their level of cover is still the right one for them and their families.
It is a testament to the strength of this organisation that we received significant interest among other funds when we invited them to discuss potential future merger opportunities.
I am comfortable and confident that in HCF we have a partner that recognises and seeks to both preserve and strengthen the organisation’s legacy and its role in the transport and energy industries. Our two organisations are strongly aligned in their commitment to members, in a commitment to not-for-profit mutuality, in being of service and in providing valuable employment and growth opportunities.
The opportunity to partner with HCF provides certainty for the future of the rt health name as part of an organisation that shares our values and is large enough to successfully navigate the challenges we face today and that will become more difficult with time.
I’d like to thank our directors for their support and guidance throughout the year and acknowledge the enormous loss to the organisation in the passing of our former Chair, Julie Pascoe.
I’d like to thank my colleagues in the executive team and in all parts of the organisation for their unflinching commitment to the fund and its members, and I’d especially like to thank our members for your continued membership, support and great affection for this organisation. It has been a pleasure to have been of service to you.
In the year ahead we will continue to look after the transport and energy industry workers who keep Australia moving and ensure that through their membership, they never have to worry about managing their health concerns alone.