Already this year, the health insurer has imposed price hikes, lost its chief executive and slapped on a fee for customers who want to leave. What seems to have gone under the radar, writes CONOR POPEis the punishing clause that the company is now enforcing when people want to cancel mid-policy

MAY YOU LIVE in interesting times is an old Chinese proverb that the VHI would do well to remember. It’s been all go at the State’s largest private health insurance provider since the beginning of the year.

First it announced some fairly savage price hikes, then its chief executive Jimmy Tolan announced he was leaving the company after a widely reported row with Minister for Health James Reilly and a couple of weeks later, the VHI made headlines for all the wrong reasons when it introduced a €50 administration charge for people who want to switch from it to other health insurance providers.

While all of these changes made headlines, some arguably more substantial and anti-competitive moves by the State’s largest private health insurer earlier this year were introduced without much comment.

The company has introduced significant changes in how it handles people switching from it to other providers. Its position now is that all its policies are 12-month contracts which cannot be changed or cancelled in advance of a customer’s renewal date, outside of some clearly defined circumstances including redundancies, death and emigration.

While the company is at pains to say that this has always been the case and does not represent a change to the terms and conditions of VHI cover, the reality is quite different.

Yes, the contracts are for 12-months and it is in its terms and conditions but until February of this year, this clause was ignored by the provider – as it continues to be ignored by all other providers.

Since February 1st, the practice of allowing customers to cancel their existing policies mid-year and take out a new policy shortly after has not been allowed without financial penalties. If a customer chooses to terminate their contract with the VHI in advance of their renewal date, it says it now constitutes a contract breach and the customers will be pursued for financial compensation.

If a customer renewed prior to May 1st or has incurred a claim since renewing they will be liable to pay the outstanding premium due until their next renewal date. If the customer renewed after May 1st and the VHI has not paid claims on their behalf since their last renewal date, the losses and expenses will amount to the health insurance levy calculated on a pro-rata basis, as well as the administration fee of €50.

Declan Moran, VHI Healthcare’s director of marketing and business development, says the company had no choice but to introduce changes in how it managed the accounts of people who were switching to different providers.

“We have always had 12-month contracts but in the past we had greater flexibility,” he says.

He says the main driver of the end to the company’s flexibility was the health insurance levy which the company has to pay whenever a person enters a contract. This is €205 for an adult and €66 for a child. “The levy for a family of four is €542 and if you renew for just one single day before switching to a rival provider then we are liable for the full levy,” he says.

The changes do not just impact on those who switch providers. Those who stay with the VHI but downgrade their cover will also have to pay the outstanding levy on their existing contract.

The other providers do not impose the charges on people leaving. “They have chosen not to apply it at this time, but time will tell. And the reality is, there are more people moving from us to them so it is us taken the hit.” He denies the move has made the health insurance market less competitive.

“A 12-month contract is a 12-month contract and while I appreciate that people might say that we have become less flexible, the reality is the market has moved on and is more mature.” And no, we have no idea what that means either.