Are the changes in the Health Insurance market good news for Consumers?

The Health Insurance market in Ireland has seen two quite seismic changes in the last year or so. First of all, we saw the introduction of Lifetime Community Rating on 1st May 2015. The other major change has been the announcement by Irish Life that they are buying Aviva Health. So will these changes have any impact for consumers?


Lifetime Community Rating

It seems like a long time ago to us now, but just over a year ago on 1st May 2015 there was a significant change to the Health Insurance market in Ireland. We saw the introduction of Lifetime Community rating (LCR), which resulted in members of the public aged 35 and older taking out private health insurance now being charged extra. Previously everyone entering the Health Insurance market paid the same irrespective of age. This change was introduced to encourage younger people into the market before they reach the age of 35, as the participation of younger people helps to keep the cost of Health Insurance down.

Since 1st May 2015 and as a result of LCR, consumers’ premiums are now permanently loaded by 2% per year for every year they are aged above 34 when they commence their health insurance cover. For example, if a 44-year-old decides to take out private health insurance for the first time now, they will have a loading of 20% added to their premium every single year that they remain insured.

So is this good news for you? Your immediate reaction might be “no”, as the cost for some subscribers (those entering the market over aged 35) are now paying more. But actually this development has been good news for health insurance subscribers! First of all, we saw a rush of younger people entering the market in early 2015 in order to beat the deadline. This was good news as younger people claim less, so a lower average subscriber age will help in keeping price increases to a minimum.  Under the old system, many people put off taking out health insurance until later in life, when they were more likely to claim. This drove up the cost for everyone. Now these people will pay a fairer price, which again is good for stability in the market. So for all existing subscribers, this is all good news!

 

Irish Life buying Aviva Health

On 9th March this year, The Irish Life Group, the parent company of Irish Life, Ireland’s leading provider of life insurance, pensions and investments, announced agreements to acquire Aviva Health and to take full 100% ownership of GloHealth. The acquisitions, which are subject to regulatory approvals, are expected to be completed in Quarter 3, 2016.

While some people may see market consolidation as a negative in terms of lack of choice, we certainly beg to differ in this instance! The current providers in the Irish market currently offer a bewildering array of different health insurance plans – about 400 in all! The issue being faced is too many plans, rather than not enough competition.

We think this merger is good news for consumers. Irish Life have tremendous reach in the Irish market and potentially can bring some exciting and innovative products to you in health insurance and indeed through packaging their health insurance products with their other specified illness cover, life assurance and income protection products.

So times are a-changing in the Health Insurance market in Ireland! You want to ensure that you are getting the right package in place, at the right price. And that’s where we come in at Lyons Financial Services. So please call us at 01 8015808 or email us at health@lfs.ie


16th June, 2016

Posted In: Advice, Health, Insights