VHI's rate freeze makes competition rethink pricing strategy

VHI’s rate freeze has thrown down the gauntlet to the competition and may make rivals considering price increases rethink their pricing strategy, a leading health cover expert has claimed.

VHI's rate freeze makes competition rethink pricing strategy

The country’s largest health insurer has cut prices on some of its plans by up to 3% and said there will be no increase on any other plans at this time.

“VHI’s announcement today will come as somewhat of a surprise to the market — but a welcome one,” said Dermot Goode, health cover analyst with totalhealthcover.ie.

“They have essentially announced a price freeze at a time of year when the market would expect them to increase rates.”

The announcement means that a family of two adults and two children on VHI’s One Plan Starter Day to Day plan renewing cover in March can save a further €55 on last year’s price rate, or €91 in the case of a family on Family Plan Level 1.

VHI also said it will have a half-price children’s offer on four plans — One Plan Family, Parents and Kids excess Plan, Teachers’ Plan Select, and Nurses’ Plan Select — for those joining or renewing from March 1.

VHI chief executive John O’Dwyer said savings and efficiencies had put VHI in a position to cut premia on seven plans together, and freeze prices on all other plans. Mr O’Dwyer said VHI continued to drive an ambitious cost containment programme and pass savings directly to customers.

Mr Goode said that, after a spate of price increases in the health insurance market, VHI’s news, coupled with last week’s announced takeover of Laya by AIG, would be heralded as positive developments for customers.

“That said, there are still thousands of people missing out on huge cost savings on their health insurance premiums, even if their rates are not going up,” he said. “If you are on the same plan for two years you are paying too much.”

Health Minister Leo Varadkar said the 3% cut was a major boost for consumers.

The price cut followed last November’s Private Health Insurance package, which was designed to address rising premiums and stabilise the private health insurance market in the interests of consumers.

In particular, Lifetime Community Rating comes into effect from May 1 with loadings for people aged over 35 who take out insurance for the first time.

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