200,000 policyholders will quit over recession, says VHI

IRELAND’S largest private health insurer has warned that up to 200,000 people will quit their policies by the end of next year as a direct result of the crippling economic downturn, forcing a sharp rise in premium prices.

While more than two million people across the country have private health insurance, VHI has claimed that the sector will plummet by 10% within the next 16 months due to the deepening financial and employment crisis.

Between January and the end of July the major health insurer — which has a 66% share of the Irish market — has seen 70,000 policy holders quit their cover, due in part to customers cutting back on services to save money. A VHI spokeswoman said that coupled with the still rising unemployment rate, which now stands at more than 12% of the workforce, the trend will see up to 200,000 people leave their health insurance policies by the end of next year. And with the major crisis looming for the sector, patient groups have warned the situation could throw the beleaguered health service into further turmoil — with an increase in premiums, concerns over the need for co-located hospitals, and increased pressure on an already overstretched public system now on the cards.

“VHI Healthcare has been in the health insurance business for 50 years and in that time we have witnessed the economy going through many cycles. We do anticipate that the overall private health insurance market will decline by approximately 150,000 to 200,000 by the end of 2010 given the expected decline in employment numbers over the next two years,” the spokes-woman for the major health insurer explained.

“Like any other business in Ireland, we have been impacted by the recession and particularly in circumstances where people are losing their jobs.

“Figures for the end of July would indicate that 70,000 customers, which equates to approximately 4.5% of the total membership, had left VHI Healthcare,” she added.

Reacting to the statement, national Insurance Regulator Liam Sloyan said that while there had been a marginal decline in insurance cover levels since the start of the year, the sector remained “resilient”.

However, Irish Patients Association (IPA) chairman Stephen McMahon said the downturn in the private insurance sector will place “huge pressures” on both the public system and patients, and could force a Government U-turn on existing private health service plans. Quinn Healthcare has gained 26,460 customers from VHI since the start of the year, while Hibernian Aviva claims to have taken in 35,000 customers.