July 28, 2012
CEO talk: insurance sector focus
Michael Bassingthwaighte, CEO of not-for-profit health insurer Peoplecare, talks cash flow, growth, decision-making and regulatory management.
Michael Bassingthwaighte has clocked up 38 years in health insurance, with the past 30 as CEO of Peoplecare, a national not-for-profit healthcare insurer based inWollongong. For the 2010/11 financial year, Peoplecare achieved a $6.096 million surplus. Here are his thoughts on how to manage cash flow, growth, decision-making and regulatory changes.
Michael Bassingthwaighte’s four priorities for health insurance management:
1. Cash flow management
- Manage risk by implementing a diversified investment strategy with a strong emphasis on defensive assets in the current volatile economic environment.
- Select short/medium-term investments with strong liquidity.
- Monitor recurring funding obligations. Make sure risk equalisation payments are linked to the timing of your investment placements.
2. Business growth
- Actively engage all staff. Align them to your strategy and make sure they have a transparent view of the business and its performance and are rewarded by success. This is crucial, as staff deliver the service and customer satisfaction.
- Review your product development and service offerings against the market. Organise independent reviews to test product and service effectiveness for consumers.
- Target a younger demographic to counteract an ageing membership base.
- Continually evaluate the impact on capital, expense ratios, acquisition costs and product profitability.
- Look beyond organic growth for collaborative opportunities.
3. Decision-making during volatile economic times
- Strengthen your board.
- Position the company for opportunities to innovate, notwithstanding the limitations of the regulated environment of the private health insurance sector.
- Develop a strong infrastructure platform (e.g. IT) to enhance service delivery and to reduce operational costs.
4. Industry changes – economic and regulatory
- Monitor key economic issues relating to affordability and members’ capacity to pay (e.g. interest rates movements).
- Keep up to date with key political issues, such as the potential impact of the means testing of the Private Health Insurance Rebate that took effect from 1 July 2012. While the implications of this policy change are still being defined, continue to demonstrate the value of the products you sell.