Central Bank orders health insurers to inform families about alternative plans when auto-renewing policies
A SIGNIFICANT victory was secured for consumers in the past few weeks when the Central Bank ordered an end to a dirty little trick used by health insurers. This is where families are given very little information about alternative plans when it comes to renewing their policies.
And if families do not contact their insurers to find out about alternative plans they are 'auto-renewed' on the existing plan, which often represents really bad value.
This is because health insurance providers are constantly altering the prices and benefits of health insurance policies.
Older plans are generally more expensive, with benefits often whittled away year by year, while newer plans are introduced all the time, with better benefits and lower prices.
This is to allow the four health insurers to compete with each other, and to attract younger members, and sought-after corporate customers that either pay fully or partly pay for the health cover of their staff.
There are now some 420 different plans. If you have not changed plans in the last few years, the chances are you are getting poor value.
The Central Bank found that just 15pc of people switch plans every year.
This means thousands of families are often automatically renewing on inferior plans.
The Central Bank, which recently became responsible for the regulation of all health insurers in the market, is to be commended for ordering health insurers to now provide more information to families when they are renewing their policies.
It carried out a probe of health insurers at their offices. This found that the level of customer care provided by health insurers varied widely.
Now VHI, Laya, Aviva and GloHealth have to change the content and presentation of letters sent to families at renewal time.
Insurers will now have to:
• Clearly explain to consumers that their policy will auto-renew on to the same policy if they do not contact their insurer prior to their renewal date;
• Encourage consumers to make contact during the renewal process to ensure the provider assesses if there are more suitable policies available.
The regulator also said it was taking action against three unnamed insurers over how they gather information on their websites for quotations for consumers. The issue here is that too little information is gathered, and choices of plans offered to consumers are not comprehensive.
The best advice is to speak directly to your insurer at renewal time and challenge them to find you the closest equivalent plan to your current one, but at a lower cost.
Broker Dermot Goode of TotalHealthCover.ie advised consumers to think of health insurance like any other insurance policy, and shop around each year. He said the latest changes would make it easier for consumers to choose a plan.
All of this is most important as close to 100,000 people who took out health cover for the first time last April and May will be due to renew soon.
They were reacting to penalties, known as lifetime community rating, which get higher the more you are over the age of 35 and take up a policy for the first time.
And it is good to see the regulator bearing its teeth given that Aviva and GloHealth are about to be merged following their takeover by Irish Life.
Remember, in this country, loyalty seldom pays.