Era of multiple rate hikes now behind us – if Government does not mess it up

THE days of multiple health cover hikes could be behind us. That is the clear implication from the second move by VHI in months to reduce the cost of a large number of its plans.

Up until the end of last year, it was usual for health insurers to announce three single-digit increases in premium rates within months of each other.

Laya and Irish Life Health blamed Government levies on all policies. They also cited the changes for using a public hospital – imposed on their members whether or not access was granted to private facilities and a private consultant. Raging rises in medical inflation were also singled out as a culprit.

But the game appears to have changed. VHI shocked the market recently when it said it was reducing the prices on half its plans, lowering child and young adult rates and offering more in refunds for GP visits.

All of this shook up Laya and Irish Life Health. They were forced to reverse their previous policies of rising rates.

Now VHI is back again, with reductions in 90pc of its plans.

It is also boosting the level of benefits on its plans.

Adding benefits is also a volte-face. For years, insurers reduced benefits unless they were introducing something they specifically knew would attract certain segments of customers, such as covering physio sessions on plans favoured by young people.

Of course there is a great irony in the fact that it is a State-owned company that is raising the competition bar for its privately owned rivals.

What is required now is that the Government does not upset the new price-cutting situation by hiking the levy it imposes on all policies, or by upping public hospital charges.

For now, the news is good. And the message from all of this is clear – do not renew without making sure you can’t get a cheaper or better plan than the one you are on now.