Southern Cross Healthcare is looking at using financial planners and brokers to sell its health insurance products from the first half of next year, chief executive Roger Bowie says.
Southern Cross will keep its in-house sales force but wants to add more distribution channels as a way of expanding the market.
"We are looking positively at a financial adviser-broker distribution channel, but with a lot of work to be done on what that means," he says.
The main issues to be ironed out are commission structures, how the market should be segmented, and what products should be sold by in-house staff and outside advisers.
Bowie says the catalyst for the move was being able to understand the workings of the broker network operated by Aetna, which it acquired last year.
The in-house sales force will be retained because it has built up strong relationships with corporate clients, he says.
"Health insurance is not always an easy product to sell. Some products lend themselves more to a relationship, and the sort of selling that financial advisers might not have time for. Equally, other products lend themselves to being fitted into a portfolio."
Bowie says Southern Cross has been mulling the idea for some time but was constrained in acting by conditions surrounding the Aetna purchase.
Initially, it was bound by a Commerce Commission ruling that it sell Aetna’s medical insurance business, and run the two organisations separately during the sales process.
However, the High Court overturned that ruling earlier this year. The commission will appeal the court’s decision later this month.
Bowie says Southern Cross has already begun approaching advisers by letter and in person to sound them out about a distribution arrangement.
So far the response has been positive, he says.
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