VHI Healthcare, the State-controlled health insurer, is set to seek the Government's permission to increase its charges later this month.
VHI confirmed yesterday that it would be seeking permission from Minister for Health Mary Harney to increase its charges. The company would not say yesterday what level of increase it will seek. In recent years, the Minister has agreed to its requests to boost charges by 12.5 per cent.
An independent expert suggested last year that it would need to increase its premiums by 15 per cent this year to remain viable.
This has sparked some speculation that the company will seek a higher increase this year. The company renews most of its policies on September 1st.
If Ms Harney allows the price hike, its customers will face an increase in their premium payments from that date.
An increase of 15 per cent would add over €6.40 a month, or more than €77 a year to one of its basic First Plan packages for which its customers are now paying €43.08 a-month. If this were to be increased by 12.5 per cent, this would come close to €5.38 a month or more than €60 a year.
A 15 per cent hike on one of its popular Plan B packages, for which it is currently charging €51.05 a month, would mean an extra €92 a year or €7.65 a month for subscribers.
A 12.5 per cent increase would result in customers paying over €6.30 extra a month and €76 a year.
If the company gets a 15 per cent increase, customers on one of the more expensive Plan E packages, which currently costs €156.34 a month, would face extra payments of over €23.40 a month and about €280 a year. At 12.5 per cent, this would cost over €19.50 a month more and €230 a year.
Ms Harney will have up to 30 days after the VHI makes its request to agree to the price rise or refuse it.
VHI has about 80 per cent of the Irish health insurance market. Its biggest competitor is the Quinn Group which took over the Irish business of British insurer Bupa earlier this year.
Bupa announced that it was leaving the Irish market late last year when in a series of court challenges it failed to prevent the Government from introducing risk equalisation in health insurance.
Risk equalisation is a system whereby profits from younger insured people, who do not tend to claim on their health policies, are used to subsidise payouts on policies held by older people, who are more likely to claim.
Bupa would have had to transfer cash to VHI in order to compensate its rival for the fact that it has a large number of older customers.
VHI warned that without this, it would be required to continue to increase charges in order to remain viable. However, Bupa said it could be forced to pay as much as €30 million a year.
Quinn Group expected to benefit from a three-year exemption from risk equalisation payments for new market entrants, but it was not entitled to this, as it was taking over an established business.
