88% plan to look for a better health insurance deal in 2014
60% of consumers who switched health insurance policies last year saved between €250 and €1,000.
Switching health insurance providers and plans is set to reach epidemic proportions according to a recent survey commissioned by Cornmarket Group Financial Services Ltd (Cornmarket). The survey showed that inertia seems to be a thing of the past. While only 26% of health insurance customers surveyed switched health insurance policies or providers in the past year, a massive 88% say that they intend to look for a better deal at their next renewal date.
According to Dermot Goode, health insurance expert with www.healthinsurancesavings.ie (part of Cornmarket), “For years, there has been a huge inertia factor associated with health insurance with people just rolling their cover over year after year - without checking alternative, better value options. However the results of the survey herald a dramatically different purchasing pattern adopted by consumers - with 88% of all respondents planning to review their cover at their 2014 renewal.
Consumer loyalty is abating as people realise that all members on the same plan will receive identical treatment regardless of the length of time insured (once they have served their waiting period). There is no “no-claims bonus” and no account is taken of the policyholder’s loyalty to a particular insurer. The cover, benefits and service are based solely on the terms of the policy in the current year.
Another interesting finding is that older consumers, who would generally be categorised as “slow to move” when analysing buyer behaviour, have joined everyone else in shopping around to try and reduce their health insurance costs”.
While the Cornmarket survey showed the advent of a more savvy consumer, the health insurance experts say that this will be a slow process. They say that although in the last year premiums have risen substantially just 26% of policy holders switched policies or providers during the year as evidenced in the survey.
Dermot continued, “People are more and more beginning to realise the benefits of actively shopping around for the best deals. However the multitude of plans on offer can be confusing which is why consumers are increasingly seeking professional advice before changing cover. In our experience, most customers want to retain all or most of their current benefits, while substantially cutting the cost of the renewal bill they’ve just received. In many cases, this is achievable and can sometimes be as simple as switching them to a cloned but cheaper plan with the same insurer. Advice is critical as the permutations and details of the benefits under the 250 plus plans on the market is a struggle for many to work through. While people are slow to change, those who did were certainly well rewarded .
The survey showed that the following savings were made:
- Less than €250: 37%
- €250 – €500: 36%
- €500 – €750: 16%
- €750 – €1,000: 7%
- More than €1,000: 4%
However, price isn’t the only thing that will determine what policy a consumer will choose. When asked what were the main factors that determined their final selection:
- Benefits came in at 52%
- Price came in at 45%
- Excess levels were at 2%
- GP Cover was 1%
Other findings from the Cornmarket survey show the top reasons for purchasing health insurance were “for peace of mind - in case of an unforeseen illness/injury” at 73% and “perception of better care received through private health insurance” at 19%.
Dermot concluded, “Using the survey, we tried to measure consumers’ tolerance for further price hikes:
- 11% of respondents stated that they would have no option but to cancel if rates continue to rise by 10-20% which would have drastic implications for the healthcare industry.
- 51% of those surveyed confirmed that they would reduce their cover to the lowest level possible before cancelling.
- 38% confirmed that they would never cancel their cover as “it’s too important”.
Given the latest price hikes, there is a strong likelihood that these statistics could become a reality which is bad news for all consumers".
This survey was carried out by Cornmarket Group Financial Services Ltd. on their health insurance customers in January 2014. The sample size used was 502 customers. Healthinsurancesavings.ie is a trading name of Cornmarket Group Financial Services Ltd.