Tuesday 15 October 2019

VHI confirms end of price war with steep rise in premiums

Stock photo
Stock photo
Charlie Weston

Charlie Weston

The end of the health insurance price war has been confirmed after the largest player in the market announced a price hike.

The move by VHI marks a reversal of its policy up to now of cutting prices. Over the last two years prices were reduced three times.

All three players in the health insurance market have now signalled increases in the cost of their premiums.

Consumers were also warned that there may be more rises this year across the market.

VHI said there will be an average rise in premiums of 6pc from the start of August for its 1.1 million customers. Some premiums will rise by 10pc.

The latest rises will leave premium costs back where they were in August 2017, as the 6pc rise will wipe out the three price cuts.

VHI's level of price rises are double those of its rivals.

The semi-State company blamed costs in hospitals, increases in consultants' fees and demand for more medical treatments by members.

It is understood there has been a surge in demand for treatments in private hospitals from members.

The rise will mean the annual cost for an adult of the popular One-Plus plan will go up by €85 a year to €1,204. For a family of two adults and two children, the One-Plus plan will be €344 more expensive from the start of August, a rise of 8pc.

The cost of the HealthPlus Premium product will rise by €320 a year per adult to €3,495 from August 1.

Health Plus Extra (which used to be called Plan B Options) will increase from €2,316 to €2,502 per adult. This is a rise of €186, or 8pc. For a retired couple, this will add a further €370 to their annual bill.

Read More: Charlie Weston: 'Don't help biggest beast in market make more profit by overpaying'

Those on Health Plus Premium (the old Plan D) will be hit with an increase from €3,175 to €3,495 when they renew on this plan. That is a rise of €320 per adult, which represents a 10pc increase.

The move to raise prices is in contrast to cuts in premiums delivered by VHI in 2017 and last year.

Last month, consumers were warned to brace themselves for health insurance price hikes after an end was declared to the price war.

The warning came after Laya Healthcare said it was raising its prices on 82 plans from July.

This will see some families paying €260 more a year for cover.

Irish Life raised prices by an average of 3.3pc this month, a move that will mean it will cost a family €110 more a year on the Select scheme, and €122 on the 4D Health 2 scheme.

VHI director of marketing and business development Declan Moran claimed that although it has announced price increases, customers' average premium prices are still lower than in August 2017.

"VHI is very conscious that our customers face financial pressures," he said.

"Vhi has kept costs down over the last number of years through prudent cost management and has passed the benefits of reduced claims costs, particularly in public hospitals, back directly to our customers in price reductions and increased benefits," Mr Moran said.

In April, VHI said its after-tax results showed a net surplus of €82.4m for last year, up from €75.3m the previous year.

Asked about pushing up premiums when it is making decent profits, a spokesperson for the company said: "VHI made a commitment that where we can, we will pass on any savings we make directly to our customers, we did that in 2017 and 2018."

Health insurance expert Dermot Goode, of TotalHealthCover.ie, said more price rises were likely from all three insurers.

"Due to increasing claims costs, particularly from the private hospital sector, we're now moving back into familiar territory of annual price hikes on health insurance," he said.

He added that if claims costs increase ahead of what the insurers have budgeted for, we could see further price increases before the end of the year.

Irish Independent

Also in Business