Southern Cross cash crisis turns people off insurance

By Deborah Hill Cone

Friday 21st June 2002

Health insurance companies have dropped to the bottom of an industry service ranking, a new National Business Review-HP Invent poll reveals.

The annual service poll, which asks people what they think of the consumer service in a range of sectors, found the view of health insurance companies got worse during the past year.

The country's dominant health insurer, friendly society Southern Cross, was revealed last December to be facing a cash crisis which it blamed on problems installing a new computer system.

The insurer got months behind in paying out claims, which led to the resignation of chief executive Roger Bowie and chairman Hylton LeGrice.

The debacle over paying out claims appears to have tarnished the public's view of health insurance companies generally, with 42% of people saying the insurers did a good job in servicing consumers, down from 51% when the same question was asked the previous year. Thirty-two per cent of people said health insurance companies did a bad job and 26% of people were unsure.

It places health insurance companies at the bottom of the rankings for good service below drug companies, banks and life insurance companies.

Oil companies are the only sector surveyed which has a worse reputation for service.

Meanwhile, hospitals have continued to make an amazing recovery in their levels of service - or at least the public's perception of them - the NBR-HP Invent poll shows.

Hospitals rate third after telephone companies and airlines when it comes to giving good service.

Overall, 71% of people said hospitals did a good job of serving their consumers, up from 65% last year.

Back in 1998 only 49% of people gave hospitals a tick for giving good service but that figure has increased every year over the past four years.

Last year's annus horribilus in the airline industry has not damaged the public's view of airline service. Seventy-three per cent of people said they did a good job of serving their consumers, up from 69% last year.

But this year's improvement does not return airlines to the rave reviews for service they got in the late 1990s. In 1998 81% of people said airlines did a good job of serving their consumers and in 1999 84% took that view.

Telephone companies, which topped this poll with a 77% approval rating for service, have also dropped back from their high in 1998 when 84% of people had a positive opinion.

People's attitudes to banks have fluctuated wildly, from 60% saying they gave good service in 1998 to 29% in 2000 and up to 64% this year.

Customers are liking power companies more this year than last.

Fifty-five per cent of people said electricity line companies gave good service, up from 45% last year, and 49% of people gave retail electricity companies the thumbs up, up from 42% in 2001.

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