Yo-yo prices for health insurance cost families
Published 07/03/2016 | 02:30
Health insurers have been accused of engaging in 'yo-yo pricing', where they put up the cost of a plan and then drop it weeks later.
People who took out the plans at the higher cost are stuck for a year on the elevated price. This is because health insurers force families to stick with plans for a year by imposing financial penalties on those who opt out of a scheme within 12 months.
Both Aviva and Laya have defended the practice, which critics have said is costing consumers.
Thousands of people who signed up for plans in January have now seen those same plans fall in price by up to €400 for a family.
Health insurance expert Dermot Goode said: "It is known as 'yo-yo pricing'. It is a new feature of the market."
He said prices rising and then falling within a short period emphasised the need for consumers to keep a very close watch on the market.
Mr Goode, of TotalHealthCover.ie, said there was nothing consumers could do if they were caught out by the price of plans bouncing around.
Laya's Health Secure Plus plan came down by €100 per adult for those opting for it after February. It had originally been launched at €1,650 per adult.
Aviva's popular corporate plan Health Plan 16.1 went down in price yesterday. The plan cost €1,177 per adult up to the end of the year.
It then went up by €210 to €1,387. From the start of this month it falls back to €1,218.
Mr Goode said prices were now varying by between 10pc and 15pc.
"For a family with two adults and two children, with the exact same cover, the cost of having signed up too early for a plan could work out at as much as €400 a year," he said.
"This underscores that families could save a bucket-load of money by doing a bit of research," Mr Goode added.
Asked about yo-yo pricing, Aviva said it regularly reviewed its prices to ensure it was competitive in the market. The company said it was adjusting its prices to retain some of the thousands of people who took out cover for the first time last year when age-related penalties came in for those taking up a plan after the age of 35, known as 'lifetime community rating'.
"Many of those new joiners came into the market on lower-priced plans and we are offering good value on good-quality plans in anticipation that they may want to upgrade their cover," Aviva said.
Laya said it kept pricing under review to ensure it could continue to provide value to its half-a-million members.
"Pricing changes and offers are common across the health insurance market throughout the year," it added.