VHI share of market plunges to lowest level

VHI’S SHARE of the private health insurance market in Ireland has fallen to 64 per cent – its lowest since its inception, according to new figures produced by the industry regulator, the Health Insurance Authority (HIA).

Statistics provided by the HIA to the Oireachtas Joint Committee on Health and Children earlier this month revealed that Quinn Healthcare (formerly Bupa Ireland) currently has a 22 per cent slice of the market while Hibernian Aviva Health has 10 per cent.

The balance is held by a number of restricted membership schemes such as those operated for gardaí, prison officers and ESB staff.

The figures show that since 2001 the VHI’s share of the market has fallen from 83 per cent to 64 per cent today while the Quinn/Bupa operation has seen its proportion of the market rise from 12 per cent to 22 per cent.

The State-owned VHI told the Oireachtas committee earlier this month that it is expected to lose almost 120,000 subscribers this year. It also forecast that it would record underwriting losses of more than €80 million this year.

In its submission to the committee, the HIA also confirmed trends revealed by The Irish Timesseveral months ago that, for the first time since the regulator was established in 2001, the size of the market is beginning to decline.

“While the reduction to date is small in relative terms, the fact that the market has ceased to grow is significant and raises the question of whether the current economic downturn will result in a more substantial decline in the next few years,” it stated.

The HIA also maintained that, despite community rating (where everyone pays the same regardless of age) being a cornerstone of the Irish market, there is now evidence of companies seeking to sell different products to older and younger consumers.

“Because the current interim measures to support community rating – the levy introduced by the Government after the collapse of the controversial risk equalisation scheme – only compensate for 50 per cent of age-related claim differences, it is very profitable for insurers to recruit younger, healthier consumers and avoid less healthy ones.

“Where insurers provide cover to older consumers, there is an incentive to sell different products to older and younger consumers in order to allow differential pricing. Despite community rating, there is evidence of this in the marketplace. This is not intended as a criticism of insurers who are doing no more than acting in their commercial interest. What we have in the market is a rather diluted form of community rating which reflects the limited support to community rating provided by the interim tax credit/levy system,” it said.

The HIA said that insurers had run special offer marketing campaigns aimed at a preferred segment of the market.

“These have involved one-day sales on corporate plans, products aimed at group schemes offering more favourable terms and additional benefits such as teeth whitening that are aimed at younger customers. All insurers have better value plans, the full details and prices of which are not easily found on their website. These plans are sold directly to lower-risk corporate group schemes,” it said.