Rise in new health insurance policies won't last – analyst
Published 20/02/2014 | 02:30
A rise of 4,000 people with private health insurance towards the end of 2013 is likely to be a short-lived trend, a leading analyst has warned.
Dermot Goode of Cornmarket Financial Services was commenting after new figures showed the first rise in people covered with private health insurance since the end of 2010.
In the last quarter of 2013 there were 2.052 million privately insured, compared to 2.048 million the previous quarter, the Health Insurance Authority of Ireland (HIAI) said.
However, overall there was a reduction of 47,000 in the numbers insured last year.
Around 45pc of the population is now covered compared to 51pc at the peak in 2008.
It comes on the day that Aviva announced premium rises averaging 13pc kicking into place from next month – with some rising by 20pc.
It is the sixth rise by health insurance companies since January.
Commenting on the increase in the numbers insured at the end of last year, Mr Goode said it was likely to be something of a "false lift".
There may be a number of reasons for it, including the promotion of special offers for children and the introduction of lower-priced plans, he pointed out.
"I would be very worried about the market figures for the first quarter of 2014. When you see nine separate price increases since December 18 ranging from 30-40pc in some cases, the trend of cancellation is set to continue unabated.
"In the last two years, around 25,000 have cancelled in quarter one. I am expecting this to increase. People may have taken out insurance in December to avoid these increases but they will have a dramatic effect."
It has also been speculated that the rise in employment is a factor in more taking our cover at the end of the year.
A spokeswoman for Aviva health insurance said: "We have had a very good response to the Focus Range of Plans which we launched in mid-2013 as a response to the affordability challenges experienced by our customers.
"And we did see an increase in membership in the last quarter of the year after a period of contraction experienced across the industry.
"However, it's too early to say if this is a trend. For example, we don't yet know what impact the busy renewal period since the new year has had on our numbers."
She said it was clear that the decline in the number of young people in the insured population was now an established trend.
The insurance company said the sector and Government must work to reverse this trend and attract younger people back into the market.
A spokeswoman for Laya Healthcare said that "cost and affordability are front of mind for consumers, and we are happy to be in a position whereby our membership has continued to grow in a declining market".
The insurance firm pointed out membership has grown from 450,000 to 475,000 since it launched in 2012, and claimed this was "testament to our excellent value".
"We know that private health insurance customers are becoming increasingly more savvy when it comes to choosing the plans that best fit their needs," she said.
"Families in particular are shopping around for better value schemes. Among our most popular schemes is Essential Connect Family," she said. "For a family of two adults and two children Essential Connect Family is priced at €2,190."