Consumers in the dark over health insurance

CONSUMERS do not know enough about the differences between Bupa and the VHI to make an informed choice between the two health insurers.

Only a tiny minority of policyholders have ever switched from one company to the other and the overwhelming majority have never even considered making a move.

And while almost all declare themselves satisfied with their existing insurer, three-quarters admit the real reason they don’t switch is because they believe it is too much bother, they wouldn’t get a better service or they would not save any money.

These beliefs are questionable, however, as less than a third of policyholders say they fully understand the features of their insurance plan and researchers suspect even this group may be overestimating how thorough their understanding is. This suspicion is based partly on the fact that more than a third of policyholders said they did not even know how much they were paying for their cover.

The findings are among the results of a survey which industry regulator the Health Insurance Authority (HIA) yesterday described as a “cause for concern.” “Health insurance consumers do not appear to know enough about their options to benefit from a fully working open market,” said IHA chairman Professor Alastair Wood.

The findings suggest that even if a third company was to enter the health insurance market, consumers would be too poorly informed to benefit from the advantages increased competition would bring.

Another worrying finding was that among those surveyed who did not have private health insurance, two-thirds cited the cost of premiums as a reason for doing without. The same number said they had not thought about insurance, did not need it because they were healthy or intended getting cover when they were older.

Prof Wood said these findings, along with the age profiles of existing policyholders, showed a tendency among younger people to put off getting insurance while in the early years of a mortgage or until they had children.

He said this posed a difficulty for the industry because the older a new policyholder was, the more likely they were to make a claim. Yet the community rating laws meant they could only be charged the same as a younger person who was less likely to make a claim.

With fewer younger members to subsidise more costly older members, premiums would have to rise for everyone, which further risked squeezing out younger people with high mortgages and other demands on their income.

HIA chief executive Dermot Ryan said it was unclear yet whether a third insurance provider which had expressed an interest in entering the Irish market would pursue the idea.