VHI doles out holiday cash to ‘keep rivals at bay’

THE VHI is offering its customers a €150 holiday voucher to entice them to pay their insurance bill monthly.

Up to 300,000 customers pay subscriptions outside group schemes and it is believed the State-owned company is offering a portion of these subscribers the offer to stop them from switching to rival company BUPA Ireland.

VHI currently has 1.55 million subscribers compared to BUPA’s 320,000.

Letters have been sent to customers offering the monthly deal at no extra cost.

The letters state: “As a measure of our appreciation, we are also delighted to offer you a holiday voucher worth €150 entirely free...So instead of worrying about paying that next premium up front, you can take time to consider where that next holiday will be.”

The letters are signed by VHI customer manager Tom O’Connor.

A VHI spokeswoman confirmed the offer is aimed at customers who don’t spread their payments over 12 months.

“A monthly direct debit makes it much easier for people to pay the premium and there’s no lump sum payment. This is a marketing campaign and it will be offered to people renewing their premiums during the year,” she said.

She said many of the 300,000 subscribers outside the group scheme already pay monthly but she refused to reveal the number of customers the campaign is targeting.

Financial health expert Aongus Loughlin said the move was an effort to retain and attract customers. Consumers could be frightened off by a large yearly payment and may be inclined to look for cheaper health cover, he said. “It won’t make a difference to them financially but it will help attract and keep customers because it never seems as costly to pay monthly,” Mr Loughlin from Mercer Human Resource Consulting said.

BUPA Ireland has also offered sports gear vouchers and gym bags to boost its number of customers from 320,000. The company has poached thousands of customers from VHI since it arrived here in 1997.

“People joining BUPA Ireland are a mixture of new customers and those who left the VHI, which is a significant part of our business,” a BUPA spokesperson said.

Another indication of the intense competition in the industry is evident from BUPA’s decision to allow some customers to claim after just six months.

VHI received €687.5m in premiums and made a profit of €33.8m last year but the Government still approved a 8.5% price increase this summer. This increased the premium cost from €1,172 to €1,272 annually for a typical family. The company could increase its prices again in September next year unless a risk equalisation fund is established. The proposed fund would see BUPA Ireland forced to compensate the State insurer with €25 million annually for having more elderly members.