The CMO's MO: Southern Cross' Regan Savage on proving the value of health insurance to consumers

In New Zealand, the surge in inflation in 2023 has posed significant challenges across various industries, particularly for health insurance providers like Southern Cross Health Insurance.  

The insurer reported a net loss of $16.5 million in 2023, a stark contrast to the previous year's $90.1 million surplus.  

The company has experienced a 42% surge in operating expenses, notably in labour costs, leading Southern Cross Health Insurance to raise premiums by 7.1% to help balance the books and maintain service quality. 

The financial strain was acutely felt in sectors where ongoing customer engagement and premium value justification are critical. For example, one of the insurer’s biggest challenges is to prove the value of the premiums to its consumers. 

In an interview with Campaign, Regan Savage, the chief sales and marketing officer at Southern Cross Health Insurance, explains the insurer is trying to prove the value of its premiums by investing in member benefits such as free virtual GP consultations, annual health checks, and mental well-being counselling sessions. 

Savage also discusses how the brand is investing its marketing budgets, how the insurer is planning to use AI and change the working culture in the company. 

Scroll below for the full interview.

1. What are the three biggest marketing challenges for your brand right now?

Like most developed markets worldwide, Aotearoa, New Zealand, has recently endured high inflation, which means the cost of living is an acute challenge for all brands, especially for categories like health insurance. Proving the value of premiums even when people don’t have significant health claims is one of our challenges.

We’ve made significant gains in this area by enhancing the benefits our members can use daily. Our data shows that those who use these new benefits are more engaged and think better of us.

Lastly, the perpetual march of digitisation can be a challenge, too—we deal with health, life, family, and emotional security. Hence, maintaining humanity and connection is vital because consumers rightly have high expectations of digital experiences, which can’t come at the expense of a high-quality outcome.

2. What are the three biggest opportunities for your brand?

I like to think of strengths as weaknesses in waiting; conversely, our challenges are also our most significant opportunities. As a membership society that exists only to serve the health outcomes of our members, in the last year, we paid 88.4 cents in claims for every dollar of premium received. 

That’s a margin of more than 30 cents compared to our commercial competitors, and it proves our difference in an environment that’s focused not only on value but also on absolute cost.

Our investment into member benefits (such as free virtual GP consultations, annual health checks and mental well-being counselling sessions) is the beginning of a greater focus on clinical well-being solutions that members can access in response to their wellness needs.

We are transforming from an insurer to an organisation that enables our members to get on the front foot with their health.

3. Where are you investing your marketing budgets this year? In what areas are you increasing or cutting spend?

Like every year, we are investing in a broad mix of initiatives this year. As an organisation, we are investing in newer, more capable platforms for continuously engaging with our members for marketing-led and operational communications.

We continue investing in polished creative, lower-cost content and a full media mix to drive acquisition and reinforce what we stand for.

4. Marketing maestros or growth gurus: are chief marketing officers the new chief growth officers?

CMOs ought to be all about growth and impact. At Southern Cross, we want to enable as many New Zealanders as possible to live well for longer, but given we’re a membership organisation, they need to join us so we can support them. 

So, net growth is critical, as is attracting new customers directly and through new employer groups and proactively identifying and contacting customers who may be at risk. We can offer members many options to manage their premiums as they age and their needs change, and we’ve seen great results and customer sentiment on the back of our proactive efforts.

5. Are you tapping into Gen AI’s awesomeness to future-proof your marketing efforts? Spill the C-suite strategy around Gen AI.

ChatGPT launched on 30 November 2022. If you’d asked me for a strategy on using Google less than 12 months after it launched in 1998, I hope I would have had the humility to say I had no idea what the long-term organisational strategy should be! We are so early in the AI curve that we can’t identify all of the use cases from which we’ll no doubt benefit within the next two or three years.

That said, what makes sense is using the emerging AI integrations in software platforms that we can access and looking for opportunities to automate repetitive tasks. We’re applying it in our media optimisation strategies, and I’ve seen other agencies use it to kickstart creative processes. 

Above all, people need to be curious while adhering to privacy laws, test it in safe environments, and encourage the earliest (nerdiest!) adopters to build and test the thesis on how it can benefit your business.

6. Trendjacking the metaverse train: is it for your brand or not?

Not right now. I can see some things we COULD do, but it’s not a priority this year. Not least because once you’re there, there’s no easy exit through the gift shop. You have to be in it to win it and build a community over the long term.

7. Give us one example to convince our readers that your brand is walking the talk on sustainability

 

Southern Cross Health Society is, in effect, a social enterprise; our impact lies in enabling our members to get back to health when something goes wrong or to stay healthy in the first place. 

We can only use member funds to serve our members’ health or run our business to achieve just that. 

In the last year, we paid 88.4 cents in premiums in claims for every dollar, with the balance required to run our business and maintain our cash reserves. So, if sustainability is about responsibly serving your community, we’ve been doing that for over six decades.

 

8. What needs to change in your industry when it comes to working culture?

 

We sell employee benefits to employers and have wellbeing coaches who work with some of our corporate customers to help them develop their internal health and wellbeing programmes. 

We walk the talk on this internally. While people work hard and manage to meet deadlines, we also actively de-prioritise, and it’s okay to ask for help.