The insurance giant is setting up a new joint venture to become the fourth provider in the Irish health insurance market. But can policyholders look forward to cheaper premiums?
Competition in the health insurance market looks set to heat up as Aviva has disclosed that it's to re-enter the health insurance market in Ireland.
The company is planning to launch a joint venture with a group including Aviva's former chief executive, Jim Dowdall, and the former head of VHI, Oliver Tattan.
The news will no doubt be welcomed by consumers who have been hit with a raft of big premium hikes over the past 18 months.
At present there are three health insurance companies operating in the Irish market: VHI, Laya Healthcare, and Irish Life Health.
Aviva was previously in the health insurance market in Ireland. It had a joint venture with AIB but sold its stake to Irish Life in 2016. Although profitable, Aviva said at the time it was selling the business as it wasn't generating strong enough returns.
It’s unknown why Aviva now suddenly wants to re-enter the market as it's unlikely to generate more profit than it previously was. At least in the short to medium term. Indeed VHI, the biggest player in the market, reported a big loss for last year.
However Aviva may have decided to reconsider the health insurance market after French insurance giant Axa bought Laya Healthcare last year. Aviva may have been keen to ensure its product offering didn’t fall behind that of its arch rival.
Either way, Irish consumers can look forward to more choice when choosing health insurance providers over the coming years.
When will Aviva start operating?
The new venture is still awaiting final regulatory approval from the Central Bank of Ireland. The name has yet to be disclosed and it may not necessarily trade under the Aviva brand.
But it’s expected to launch before the end of this year.
Aviva is delighted to support the set-up of an exciting new health insurance business in Ireland. This is great news for Irish consumers as it will provide greater choice and value. This investment expands Aviva’s offering in Ireland to General, Life and Health Insurance and further demonstrates Aviva’s commitment to continue to grow in Ireland as a leading financial services provider.
Declan O'Rourke, CEO of Aviva Insurance Ireland
Will this lead to lower prices?
Perhaps.
A new provider will obviously lead to more choice. Mind you, there are already over 300 health insurance plans on the market for consumers to choose from. So one could argue that there's more than enough choice already.
And whether consumers can look forward to lower premiums is debatable.
More competition in a market will usually only lead to lower prices if it’s a lack of competition that’s keeping prices high in the first place.
However in recent years, an increase in the number of claims, partly as a hangover from Covid, as well as rampant medical inflation (which has been running far in excess of general inflation for years given the huge costs of new treatments) has been behind most of the hikes in premium costs.
That's not going to change with a new provider unfortunately. In short, additional providers may not make much of a difference in a market where rising costs are the main factor behind rising premiums. But Aviva's entry may at least keep premiums more stable. And consumers who have their car or home insurance with Aviva may be able to avail of a multi-policy discount.
There's also an argument about how many providers a market the size of Ireland's can handle. Some experts have questioned the ability of the market to hold more than three or four players long term. We may yet see more buy-outs, consolidations and sales in the years ahead meaning we're back with a three-player market.
Review your health cover
Regardless of the impact of Aviva's venture on the market over the coming years, you can still seek out better value by shopping around.
The HIA offers a free and comprehensive comparison tool to help consumers compare health insurance policies.
However health insurance is a very complex product. The right plan for you will depend on many different factors. And it can also be quite difficult for the average person to understand exactly what’s covered with every policy. If you’re not careful it’s very easy to overpay, or equally as worse, underpay and not be covered for the treatment you need.
Treatments, consultant cover, the excess, and outpatient benefits can all differ wildly between plans. And health insurance plans are constantly being updated by insurers too. What’s more, getting the right info on corporate plans, which often offer the best value and which are legally open to everyone, can sometimes be tough.
There are independent health insurance experts who, for a small fee, can conduct an over-the-phone consultation with you and recommend an appropriate plan.
Unfortunately us Irish don’t like paying for financial advice. But for a relatively small fee of €100 or €150, say, you could end up saving well over €300 or €400 a year on your health insurance. And you’ll get a plan that’s tailored to your own specific needs. So don't be afraid to check out these services too.
