The chief executive of Aviva Jim Dowdall has denied the company misled potential customers by saying three weeks ago, after the VHI had announced price increase, that it had no plans for similar hikes before unveiling across the board increases of 14 per cent today.
He said the increases had only come after an ongoing review of its position and claimed it had been delayed for as long as possible.
He said the company had no choice but to impose the increases because the cost of private beds in public hospitals had increased by 21 per cent and medical inflation was running at 9 per cent. He also said the health insurance levy was a major factor in the price increases.
The Irish Patients' Association (IPA) described the price increase as a great concern.
"We are unconvinced that this is solely to cover additional demands for private health services and medical inflation and not some marketing strategy," a spokesman said.
The organisation said price changes for all providers should be announced on one day each year so customers and potential customers were not misled.
The Labour party said that the State's health insurance system was dysfunctional and claimed that Aviva had let the VHI off the hook by introducing price increases of its own.
"Coming just weeks after the VHI premium increase, today's news is a clear indication that the health insurance market is broken, and needs a radical overhaul," the party's health spokeswoman on health Jan O'Sullivan said.
"In a functioning market, the provider that offers the lowest price would be doing everything possible to protect that competitive advantage. Instead we see today that Aviva is perfectly happy to increase premiums in line with its competitors. It is clear that something is wrong."
She described the current system as "not only inequitable but it is also hugely inefficient and works neither for those who have health insurance, nor for those who do not. It is clear that a complete change is needed sooner rather than later."