A LEADING health insurer has been advised to dump loss-makers from its books and replace less profitable customers with healthier subscribers.
The advice is contained in a confidential report prepared by management consultants Deloitte for Aviva, which has been seen by the Irish Independent.
The report said Aviva should focus on profitability by maintaining its customer base but replace "less profitable customers" who would make claims with "better profiled customers".
Under the current rules governing health insurance, all companies must operate open enrolment and cannot discriminate against a customer if they are older or sicker.
However, controversy has raged over the way various health packages are sold by all companies, who are keen to attract younger and healthier customers.
A spokeswoman for Aviva said yesterday that the "language" used in the report was not chosen by Aviva and it fully supports community rating, which forces insurers to offer plans to everyone at the same price.
However, she said "balancing of risk profiles is prudent business" for any insurer.
She added: "To do this we must ensure that we continue to retain all our existing customers while at the same time balancing risk profile across our entire customer base.
"The principle of insurance is to balance the risk profiles of customers so that the lower-risk supports the claims of the higher-risk profiles."
She added that it is widely known that the health insurance market is in flux and shrinking, with 6,000 people opting out of cover each month.
"Young healthy people are the very lifeblood of the private health insurance market," she said.
"Intergenerational solidarity, whereby younger and healthier people effectively subsidise older less healthy people, underpins the health insurance market."
A spokesman for Deloitte yesterday declined to comment on the contents of the report, saying it protected client confidentiality.
There has been marketing of certain products to particular sectors, but the regulator has been trying to educate the public to shop around, he added.
A new risk equalisation scheme is on the way which involves insurers paying into a fund that will be redistributed to support those with the higher proportion of older and costlier subscribers.
The fund will not stop insurers marketing their packages to particular groups, but it provides stronger incentives to cover an older person.