THE NATIONAL Consumer Agency has accused the VHI of targeting consumers in financial distress and has called on it to reverse new charges which the agency believes have been “clearly designed to inhibit competition”.
The agency’s chief executive Ann Fitzgerald has written to Jimmy Toland, her VHI counterpart, criticising its new €50 administrative levy as well as the imposition of financial penalties on people who leave before their 12- month contracts expire.
In a letter seen by The Irish Times, Ms Fitzgerald expressed concern about the impact the changes would have “on consumers experiencing financial distress and who decide to cancel their health insurance cover” and the impact on consumers who wished to move to alternative providers.
She called into question the VHI’s treatment of the health insurance levy applied by Government. The health insurance companies pay the levy upfront and the money is recouped over the 12 months of the contract as most customers pay monthly.
The VHI recently decided that customers who “breach” their contract must pay that proportion of the levy which it has not yet collected on a monthly basis. For a family of four – two adults and two children – cancellation of a policy after four months would result in an invoice of €360. A single person must pay €137.
“This is a considerable burden on a customer or family ceasing health insurance because they cannot afford it,” Ms Fitzgerald said. The approach was “unfair on a customer who was switching provider, as that customer will now be double-charged the levy – by VHI Healthcare post exit and by the new provider on joining a new scheme”.
She added that the “unilateral decision” was “a blunt measure to address a complex issue, to the very considerable detriment of the consumer”. She strongly urged the company to reverse its decision “and to enter into discussions with the Department of Health and the other two insurers on the future treatment of the levy”.
The second issue raised by the agency relates to the VHI’s imposition of the €50 charge. Ms Fitzgerald said the VHI was “no different to any other business that seeks to retain customers; however any costs incurred in so doing should be part of its general business costs and not part of an administration charge”.
The third issue relates to VHI customers who renewed subscription before May 1st or have incurred a claim since renewing.
The company has introduced a liability to pay outstanding premium amounts for the balance of the year. “We do not, in the main, have an issue with such a requirement where a claim has been incurred,” Ms Fitzgerald said. “However, we consider it most unfair where no claim has been incurred and, by definition, where there is no liability to pay claims.”
