VHI U-turn set to cost families an extra €100
Published 29/09/2015 | 02:30
State-owned health insurer VHI has changed tack and is to push up the cost of its premiums.
The insurer had consistently said this year it had no plans to replicate the price rises announced by its rivals over the past few months.
But the VHI move ends a price freeze it has had in operation since the start of the year.
The VHI rises are between 1pc and 5pc, and will see some families having to pay more than €100 extra if they renew or take out a plan from November.
The insurer said it was the first rise in 20 months and is necessary to cover the higher cost of claims.
Families with two adults and two children on the popular One Plan Family will see the cost jump by €105 a year to €2,708.
The adult rate for the One Plan is going up by €32 a year.
The move comes after 65 Laya plans went up for those renewing from this month, in a move that will see families paying up to €500 more when they renew.
Laya pushed up prices by an average of 4pc.
Aviva increased its rates by 5.5pc on average for those renewing or taking out a new plan from the start of last month.
And GloHealth announced rises of 5pc earlier in the year.
The increases from the four insurers are despite thousands of new customers taking up health insurance for the first time in May to beat new late-entry levies.
VHI's director of marketing and business development, Declan Moran, said the company was being hit with higher costs due to improved medical technologies, new life-saving drugs and new treatments.
And there is a rise in the number of customers seeking medical care, he added.
"VHI remains committed to keeping prices as low as possible," Mr Moran said.
The VHI is the State's largest private health insurance provider, with about one million customers and €1.5bn in annual premium income.
The insurance group became a regulated entity for the first time at the end of July after negotiating a subordinated-debt deal with Berkshire Hathaway, which is controlled by legendary investor Warren Buffett.
This allowed the VHI to satisfy the Central Bank's demands in relation to the capital reserves it has to put aside.
The largest health insurer in the State, the VHI surprised the market at the start of this year when it said it was cutting the price of a number of plans and said there would be no increases on other schemes.
VHI Healthcare cut the prices on seven popular plans by around 3pc.
Experts said it was the first time in living memory that the VHI had cut prices, with premiums on other plans frozen. The reductions took effect from March 1.
Health insurance expert Dermot Goode said the higher prices will coincide with the ending of a half-price offer for children. The price rises come ahead of the busiest period for renewals.
"I am surprised that the VHI has announced price rises, which I had not expected this year, and given what the company had said previously about prices," said Mr Goode, of Totalhealthcover.ie.