Rival targeting wheezy insurer

By DANIEL RIORDAN

A major competitor is taking aim at Southern Cross Healthcare as it struggles to placate disaffected customers.

The country's fourth-biggest health insurer, Sovereign Healthcare, this weekend begins an aggressive marketing campaign targeting customers of the industry giant.

Southern Cross has about 800,000 members - about 80 per cent of the industry by premium income and 71 per cent by lives covered - but has been having major problems in recent months meeting claims from customers and health providers.

It attributes the problems to glitches in moving its claims assessing functions to a new computer system acquired when it bought former number two competitor Aetna Health.

But industry sources say the transition has been badly managed.

Sovereign Healthcare marketing head Vena Crawley said that while Southern Cross' problems were bad for the industry the opportunities for his company were too good to pass up. Sovereign, owned by ASB Bank, has about 70,000 policyholders covering about 140,000 lives.

"We're running large advertisements in the major newspapers Saturday, Sunday and Monday to let people know we have an alternative product."

The three advertisements avoid mentioning Southern Cross but emphasise Sovereign's commitment to pay out on prior-approved claims within 48 hours and contain the catchlines:

* We don't make any wild claims, we just pay them.

* Do you need a second opinion on your health insurance?

* Health insurance shouldn't make you sick with worry.

Mr Crawley said the advertisements were part of Sovereign's normal campaigning but had been moved forward by about a month after Southern Cross' problems became public.

A television campaign with a similar message begins in March, but it would be bolder than its print counterpart, said Mr Crawley. Whether it would make direct references to Southern Cross had yet to be decided.

The No 2 health insurer, Tower Health & Life, says it will not make direct efforts to target Southern Cross members.

"Thinking people will be making their own choices, and we're happy to help them," Tower NZ chief executive Jim Minto said last week.

Another of the big insurers, UniMed, is also not planning to trade directly on Southern Cross' misfortune, said general manager Dermot Martin.

"The industry's very competitive but the ability for people to switch policies between insurers and not be disadvantaged isn't always available because of pre-existing medical conditions."

UniMed had fielded twice its usual number of inquiries from Southern Cross members over the past six weeks, but had advised many of those members it is in their best interests to stick with the embattled insurer, said Mr Martin.

"I've been in the industry 15 years and I don't believe it's appropriate to take advantage of what I believe is a temporary problem with Southern Cross' claims processing."

In Dunedin, Mercy Hospital says it has piled up thousands of dollars of debts because of backlogged Southern Cross insurance claims.

Mercy Hospital chief executive officer Michael Woodhouse said Southern Cross payments, which comprised about 30 per cent of Mercy's total income, were rarely so late. The hospital has been told the backlog should be cleared by late next month.