Health insurers ordered to be more straight-forward with their customers

Health insurers have been ordered to stop confusing customers and discouraging them from shopping around for the best deals.

New rules set down by the Central Bank say insurers must collect more information from new customers to help them get the best policy to suit their needs.

They must also give existing customers clear choices in renewal notices, encouraging them to talk through their options instead of simply auto-renewing them on their existing cover.

There are just four main health insurers in the Irish market, providing cover to 2.1 million people, but, between them, they offer up to 400 different plans. Constantly changing brand names and benefits makes it extremely difficult for customers to determine which plans provide best value.

Central Bank research shows 85% of policyholders renewed the same policy with the same insurer at the last renewal date and 73% never considered making changes to their policy or provider. The Central Bank, which took over regulation of the health insurance industry last year, believes those figures stem less from customer satisfaction than from lack of information.

More than half of those surveyed found it difficult to choose between health insurance products, or, to find information that made it easy to compare plans. Only a quarter made contact with their insurer or broker before the renewal date, despite the huge cost that sees a typical family-of-four parting with around €3,000 for a mid-range plan for the year.

Bernard Sheridan, Central Bank director of consumer protection, said the research aimed to find out how customers were being treated at the crucial time of policy renewal by VHI, Aviva, Laya, and GloHealth. It involved surveying 1,000 customers, on-site inspections at insurers’ premises, and listening to live and recorded telephone calls.

“We found that consumers find it difficult to compare policies and most consumers renew the same policy with the same provider,” he said.

“We also found that renewal notices are not highlighting important information, and that providers should be doing more to ensure they are providing the most suitable insurance policy, particularly when consumers are purchasing online.”

Online customers were at a particular disadvantage, because too little information was collected from them before a policy was recommended for purchase. Three of the four insurers did not even offer online customers the chance to choose from their full range of policies if they wished.

Mr Sheridan said this was just one of the issues the Central Bank wanted to see swiftly addressed. Follow-up inspections of all four insurers is to take place this year and any still failing to ensure adequate customer protections could face enforcement proceedings.

Insurance Ireland, which represents the four insurers, said: “Members have noted the issues raised by the Central Bank and each individual insurer is now working to address these.”

It said the research had positive findings, including that 84% of customers felt their insurer did its best to understand their needs.

Industry commentators disagreed. Dermot Goode of comparison website totalhealthcover.ie said: “The report highlights what we have been saying for many years, now: Too many consumers simply renew cover with the same provider and often the same plan without looking at other options available to them and, as a result, the majority are missing out on savings anywhere in the region of hundreds to thousands of euro.”

Dermot Wells, general manager of Cornmarket Financial Services, said: “If 85% of people renewed on the same policy with the same provider, it is highly likely they are overpaying for their cover. With over 400 plans on the market, it is very difficult for ‘Joe Soap’ to fully understand what’s on offer, and guidance and support are crucial to ensure consumers have the cover they need.”