Southern Cross, the country's largest health insurer with 810,000 members - nearly one New Zealander in five - has been beset by disgruntled clients who have waited weeks, and sometimes months, for their claims to be settled.
Private hospital operators and medical specialists have also complained of being out of pocket.
The problems arose after Southern Cross' controversial purchase of its prime competitor, Aetna Health, last year, in part to obtain its multimillion-dollar computer system.
Mr Bowie took responsibility for the delays and admitted that the company had failed to hire and train enough staff to handle the switch to the new system.
Yesterday, the board said Mr Bowie's resignation was a result of the different ways he and the board saw the company's future direction.
Dr LeGrice told the Herald that Mr Bowie had agreed to the contents of the board's statement and was "absolutely happy" with it.
The board expressed confidence that the resignation would not slow attempts to clear the backlog of claims by the end of next month.
Mr Bowie, appointed in 1995, could not be reached for comment last night.
Known as a strategic thinker and hard-nosed executive, he took over Southern Cross after 20 years in the international freight-forwarding business at DHL Worldwide Express. He led the insurer through restructuring and its acquisition of Aetna.
Dr LeGrice said the claims backlog had "some bearing" on the resignation of Mr Bowie, whom he called a hard-working executive.
The board had been assured by management last month that the company was catching up, but matters only got worse.
"The board is extremely embarrassed ... We are very upset," said Dr LeGrice.
In the meantime, a special board subcommittee created yesterday would oversee a resolution of the problems.
Dr LeGrice said there was no pressure from the board for Mr Bowie to resign.
The resignation came on Tuesday evening during a long board meeting with Mr Bowie.
Dr LeGrice accepted that the board had to take some responsibility, but he stressed that the backlog problem was not a governance issue.
"The board determines policies, this was an operational issue."
He said he had total faith in his six fellow board members - "We kept asking questions from the management team" - and saw no reason his own position should be reviewed.
"I know my board has great confidence in me and my leadership. It is a very strong board."
Dr LeGrice said the extensive Herald coverage had frightened a lot of Southern Cross members and created instability, but had nothing to do with Mr Bowie's resignation.
His statement said: "Southern Cross is in a strong financial position, as exhibited by the strength of its balance sheet and the recently confirmed Standard & Poor's credit rating of AA-."
Audit subcommittee chairman Bryan Kensington said he was sure the backlog would be cleared by the end of next month to the point where claims would be processed within 15 working days.
The New Zealand Private Hospitals Association president, Andrew Blair, said Mr Bowie's resignation had come as a surprise.
Mr Blair said he would seek an urgent meeting with Southern Cross to seek assurances that the resignation would not in any way compound the problems.
nzherald.co.nz/southerncross
