Firm Hopes to Boost AIDS Insurance Sales

A Santa Monica insurance company is blanketing businesses that cater to homosexual men with promotional pamphlets in hopes of boosting sales of medical insurance covering acquired immune deficiency syndrome.

Coastal Insurance Co. has sold 365 AIDS medical expense policies since Jan. 14, when the state Department of Insurance approved sale of the insurance, the first of its kind in California.

Inquiries have doubled in the last two weeks, to about 15 a day, according to James Hotinger, a Coastal spokesman. Hotinger attributed the increase to the distribution of 11,000 pamphlets in 250 locations around the state, including health clubs, restaurants and bars in West Hollywood.

About half of the policies were sold in the San Francisco Bay area and one-quarter in West Hollywood, Hotinger said.

“We have been leaving (the pamphlets) anywhere that high-risk individuals might be in attendance,” Hotinger said. “Those policies have been coming in extremely well.”

The insurance, which costs $194 a year, will pay up to $64,000 in the first year of hospitalization for AIDS, a condition that destroys part of the immune system and leaves the body vulnerable to infection. Homosexual men are the most frequent victims of the disease, which is transmitted through bodily fluids.

AIDS coverage has triggered debate among insurance providers. Some say that holders of comprehensive health care plans do not need it, although proponents say the special coverage could serve as an effective supplement to regular insurance.

Hotinger admitted last week that sales had been disappointing. “I think we expected the business to build more rapidly at first,” he said.

The pamphlets contain AIDS insurance applications that protect a potential client’s privacy. Hotinger said that sales had lagged because clients did not want to discuss the issue with an agent. “This is a very private, personal thing,” he said. “I think people who were interested had the fear that they did not want to discuss it with other people.”

He also said that independent agents had not pushed the policy aggressively because profits from the relatively small premium were not high.

The company also tried to sell policies to nurses and paramedics after some health-care workers had indicated interest in the coverage. However, a home mailer sent to 5,000 members of the California Nurses Assn. brought little response, Hotinger said. He said there is no evidence of health care workers contracting the disease from contact with AIDS patients.

New policy holders must wait 90 days before filing a claim, so Coastal cannot expect to receive one until mid-April. Coastal received just one request for an AIDS claim form but it has not been returned, Hotinger said.

The small Santa Monica company, with assets of $4.6 million, opened its doors just three years ago.