FOR AT LEAST four years now Pricewatch has been writing about how messed up Ireland’s health insurance market is – and with good reason.
The cost of some policies has gone up by nearly 100 per cent in that time. The three main players in the market – VHI, Aviva and Laya – have been falling over themselves in their haste to announce price increases, with each rolling out three separate hikes over the past 12 months.
Of course, none of these price increases are the company’s fault. The Government, the medical profession and advancing technology have all been blamed for spiralling prices, while the Irish public has been castigated for not being as healthy or as young as they might have been.
A growing number of consumers have just thrown their hats at the whole business, with about 6,000 people a month abandoning their policies last year.
So, if health insurance in Ireland is in such an unhealthy state, what is GloHealth doing?
Last Monday this company – whose snazzy name is, we were told, supposed to conjure up feelings of good health – made its debut in the Irish market.
A large room in the Royal College of Physicians building on Kildare Street, Dublin, was bathed in a green glow for the occasion as chief executive Jim Dowdall got to his feet to set out his stall.
His message was simple and can be paraphrased as follows: “We will simplify health insurance and we will save you money.”
It is a message people will want to hear. And Dowdall knows that because he has been here before. He was one of the founding directors of Vivas, the private start-up health insurer in 2004. In 2008, Vivas was acquired by Hibernian Aviva, which was subsequently rebranded as Aviva. He became head of Aviva’s healthcare business following the acquisition, then chief executive of Aviva Ireland in January 2010.
At the launch he denied his new company is exclusively targeting younger, more profitable customers at the expense of older ones, and he told Pricewatch everyone will find better value with the company.
Whatever about the prices – we will come to them later – GloHealth deserves credit for making its offerings simple. In the 1980s, when there was just one health insurer in the market, anyone with a rudimentary understanding of the alphabet knew how things stood. The VHI had six plans which went from A to E, and most people went for B.
Today, the three main providers offer more than 200 plans, many of which have incomprehensible names and price structures that are impossible to understand.
The sector is so bewildering that just 23 per cent of people with private health insurance have ever switched providers, despite the fact there are savings to be made from moving from one company to another.
GloHealth is changing the game. It is offering three core plans – Good, Better and Best – which is says will appeal to the majority of their potential customers, along with a couple of high-end plans to cater for those who want the option of a private room in a private high-tech hospital should they fall ill.
But will it save people money?
On the face of it, it looks as if it will. A family of two adults and two children can save up to €465 by switching from VHI’s One+ Plan to GloHealth’s Better plan, and the two plans are, broadly speaking, identical.
An Aviva customer on the Level 2 Hospital plan can save €266 by switching to GloHealth’s Best plan, while a couple on Laya’s Essential Complete Plan will save €401 when they switch to GloHealth’s Better plan. With its Better and Best plans, all children are covered free of charge until they are three.
The GloHealth Better costs €795 for adult and €195 for a child with under-threes going free. The cost of a policy for two adults and two children under three is €1,590, while the price for two adults and two over-threes rises to €1,980.
The VHI One+ Plan costs €893 per adult and €231.60 per child, which takes the total cost to €2,250 for a family of two adults and two children. The Laya Essential Complete costs €995.98 for an adult and €208 for a child, so the total cost would be €2,407.96.
But price is not everything. GloHealth customers can also choose benefit packages depending on their requirements. Some of the benefits in the eight personalised packages include free travel insurance, a free flu vaccine and free family first-aid courses.
The news of the company’s entry into the market was greeted positively by industry sources. “Keeping young people in the market is crucial to the working of Community Rating,” says Patrick Brennan of Irish Health Insurance.
“Keeping younger people in the system is the most effective way of ensuring affordable premiums for older members. Take out the younger members and you could see a doubling of premiums, therefore any effort of a new insurer to offer affordable cover for this demographic should in time benefit everyone,” he says.
In time, “there will be a robust reaction by existing insurers to this new offering”, he says, but he plays down speculation that it will spark a price war and says there has “been no analysis on this”.
“From a professional point of view, this new entrant to the market and the changed way in which they hope to offer health insurance is further reason to seek independent expertise and advice for both companies and individuals,” he says.
Insurance expert Jeremy Tucker agrees. “They are going to offer more tailored options, so people will get to choose plans to actually suit their needs.”
Tucker runs buyhealthinsurance.ieand he commends GloHealth for "trying to keep it as simple as possible and will be 100 per cent clear on what they offer, hence much fewer plans to choose from but all offering great cover".
"The arrival of GloHealth will definitely be good news to consumers," says Stuart Endall of getcover.ie, " particularly those who are struggling to keep up premium payments and those who have been forced to cancel their cover due to monetary difficulties."
He says the company would “simplify the entire health insurance industry by allowing consumers to choose “what can only be described as tailormade health insurance policies”.
