Reflecting the pressure
of the country’s economic environment, a survey by Ireland’s Health
Insurance Authority (HIA) of 1,011 showed that only 43% had private
health insurance in 2011 compared with 46% and 52% in 2009 and 2005
respectively.

This means the size of
Ireland’s health insurance market peaked with 2.3m customers at the
end of 2008 and had declined to 2.14m by the end of March
2012.

Health insurers face a
significant challenge in Ireland as the survey found the number of
people perceiving PHI as a necessity, and not a luxury, has fallen
from 67% in 2009 to 59% in 2011.

Furthermore, the number
of people without health insurance cover rose from 15% in 2009 to
20% in 2011.

The overwhelming reason
for no longer being covered by private health insurance is expense
– this stands at 50% of respondents who have cancelled
cover.

The other main reasons
were based on economic factors.

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For example, 16% of
people said they no longer have private health insurance because
they had lost their jobs and had to cancel it.

HIA chief executive Liam
Sloyan said: “This survey provides a comprehensive insight into the
attitudes of consumers in the marketplace. It shows that consumers
continue to believe that private health insurance is a highly
valued commodity and there is a strong desire to have health
insurance cover, but that many people are under strain to keep
their cover due to affordability.”

Challenging
period

To better understand
what the HIA 2011 figures mean, it is important to bear in mind
that they mark a difficult period for the Irish health insurance
sector.

For example, in December
2010, Life Insurance International reported that
VhiHealthcare had lost approximately 120,000customers during 2009.
Vhi is still sufferingfrom its legacy as Ireland’s first – and, for
along time, only – provider of private healthinsurance (PHI). This
has left it with an ageing client group while its main competitors
could “cherry pick younger customers”.

A spokesperson from Vhi
Healthcare explains: “Difficult economic conditions forced many
customers from the market and many more have downgraded their
existing cover”, although considering the extent of the economic
downturn “the demand for private health insurance held up
well.”

Ireland’s Quinn
Healthcare has fared better and following a management buyout in
December 2011, the company was rebranded as Laya Healthcare, with
its new underwriter being Swiss Re subsidiary Elips.

In a statement following
the rebrand, Laya announced the creation of 100 jobs over the next
three years and the intention to launch several new health
insurance lines.

Employer
schemes

The apparent lack of
employer involvement in private health insurance schemes is
 HIA survey. In Ireland, it notes that 18% of businesses
operate an employee PHI scheme.

In addition, only one in
three employees are part of a work group scheme, up slightly from
2009.

Of those questioned, 29%
in 2011 said a PHI plan was the most important employment benefit,
compared with 18% to 2009.

However, it was the
third least likely benefit to be offered by employers, with only
health club membership and public transport being less
common.

A Vhi spokesman said:
“Reductions in the number of work-based schemes and contributions
from employers is certainly a challenge to the market.

However, corporate based
schemes still have an important part to play given the rise in the
number of people who believe that health insurance is the second
most valued employee benefit after a pension.

“As such, companies will
still be likely to provide for their employees’ healthcare as a
tool to attract and retain key employees.”

The spokesman explains
that both Vhi and Laya rely on direct selling for their business,
either to individuals or through corporate group schemes, so a low
level of corporate health cover would have repercussions on their
business.

Potential
upturn

Despite the economic
gloom in Ireland, there may well be hope ahead for Irish health
insurers, with the HIA reporting that 14% of people intend to take
out cover over the next few years, up from 11% in 2009.

Vhi Healthcare is also
expecting an upturn in the near future due to Universal Health
Insurance (UHI) legislation.

Proposed by the incoming
Irish government in 2011, this will come into effect by 2016 and
completely overhaul funding for the public health
system.

Commenting on the UHI
plan, the Vhi spokesman said: “It will completely reform the way
the health system is funded.

Currently, the health
system is funded largely through taxation with some €1.9bn a year
also being contributed by private health insurance
schemes.

“The UHI plan is
scheduled to be replaced by a new system of mandatory universal
health insurance which will require all citizens to purchase health
insurance.”

The Vhi spokesman said:
“Naturally, this will mean the sector will grow from covering 2.14m
people at present to covering all 4.6m people currently residing in
Ireland.”