Insurance is a game of inertia. Getting customers to sign up in the first place is the key. Once you have them, they tend to be slow to move as Irish data on consumer switching activity on utilities and banks show.
The same is undoubtedly true for health insurance, a sector where the 350 plan options for consumers must prove intimidating for anyone looking to examine their options for better value in the market. According to the most recent report of the Health Insurance Authority (HIA), which regulates the sector, queries from consumers about switching plans accounted for significantly less than 1 per cent of the calls it dealt with.
The auto-enrolment pension scheme seems good on paper, but how will it actually work?
Where inertia is king, the last thing any business wants to do is give customers cause to reconsider their position. Yet this is precisely what Ireland’s largest private health insurer, VHI, has done in announcing that it is axing four of its plans, including two that rank among its most long-standing and popular with consumers — Health Plus Access and Health Plus Extra, formerly known as Plan B and Plan B Options.
In the process, VHI is giving 130,000 consumers (close to 11 per cent of its customers) a reason to look at alternatives, including those offered by its rivals in the sector — Laya Health and Irish Life Health.
Industry analysts note that VHI offers more modern plans that are largely similar in the cover they offer at broadly similar prices. But they do not rank among the 30 private health plans that account for 50 per cent of the State’s 2.5 million private health insurance customers, according to the HIA. Two of the four plans being shut down do.
So here’s the thing. If, as VHI says, it is looking to deliver “a simplified product structure”, why not simplify its offerings by shutting down the less popular, but broadly similar plans?
And if it is focusing on “enhanced offerings to better meet member’s needs” as it professes, it could surely just amend the cover available under the existing popular plans as it already does regularly, and keep playing to that customer inertia.
Or could something else be at play?
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