Ireland: Aviva to Launch Health Insurer

In this Private Medical Insurance In Focus article, leading private medical insurance analyst, Ian Youngman, takes a look at news that Aviva is set to launch a new health insurance business in Ireland.

• Aviva is launching a health insurer in the Republic of Ireland in partnership with a local company.
• As yet the company has no name.
• The name may include the Aviva brand, but Aviva is yet to decide this.
• It has yet to get approval from the Health Insurance Authority (HIA).
• Aviva optimistically expects to get approval in a few months and be open for business in late 2024.
• Aviva sold its health insurance business in Ireland in 2016 to Irish Life.
• Aviva owns 50% of the new insurer.
• The remaining 50% is owned by new local company Douglasdale.
• Douglasdale is owned by Oliver Tattan, Jim Dowdall and Stephen Loughman.
• Tattan served as chief executive at VHI from 1998 to 2001 before co-founding VIVAS Health and GloHealth.
• Tattan also set up investment manager, Insurance Regulatory Capital, consumer network OneBigSwitch and biometric identity manager Daon.
• Jim Dowdall co-founded VIVAS Health and worked for Aviva Health before setting up GloHealth.
• Loughman, a former actuary at VHI, was chief financial officer at VIVAS Health, GloHealth, and Irish Life Health.       
• State-owned VHI remains the largest health insurer in the market with 1.2 million medical coverage customers, giving it a 49 per cent market share.
• Despite the increased cost, the number of individuals with private coverage rose last year by 1.6 per cent to 2.48 million, HIA said in its latest annual market report.

Analysis

• Aviva is making this move because it sees a good opportunity to make money.
• The Irish population is increasing, and the economy is in good shape.
• The market leader is state owned VHI.
• The other two are Laya Healthcare (AXA) and Irish Life Health (Great –West Lifeco).
• VHI has 49%, Laya Healthcare 27% and Irish Life 23%
• Offshore PMI is not allowed.
• Offshore IPMI is probably not allowed.
• Health insurance premiums rose by an average of 10 per cent last year to €1,594, according to the Health Insurance Authority (HIA), amid a rising number of claims and costs.
• There is free universal healthcare by state subsidy to hospitals.
• The Irish health care system remains predominantly tax funded.
• The standard of care in hospitals and clinics is very good but with long waiting times and over crowding.
• Many healthcare reform attempts have failed.
• Health insurance is not mandatory but 48% of the Irish population holds private health insurance.
• The Irish State supports the private health insurance market through tax relief at source of 20% of health insurance premiums.
• It also supports the community rated market by providing age related tax credits in respect of those over the age of 60 that help to meet their higher claims costs.
• According to the Health Insurance Authority 2.44 million people have PMI in 2023.
• In addition to those insured with inpatient plans, there are 107,000 insured with products solely providing outpatient benefits or health insurance cash plans.
• A risk equalisation scheme effectively means that as VHI has an older policyholder book, other insurers have to pay VHI.
• The risk equalisation scheme is complex and controversial.
• Aviva’s re-entry into the Irish health insurance market after an eight-year hiatus may stabilise prices but costs are rising fast, so a price war is unlikely.
• VHI and Laya have increased their prices again in the early months of this year.
• Ireland’s largest private healthcare insurer VHI posted a net deficit of €43.4m despite growing premiums last year.
• 130,000 VHI members will be forced to change their healthcare cover, with the insurer set to axe some of its most popular plans.
• It may launch in 2024 but 2025 is more probable,
• The expectation among brokers is that Aviva will target large corporates in a bid to get scale and credibility.
• There is also the potential for cross-policy discounts being offered on Aviva’s range of general insurance policies.
• Any new entrant will need to build scale quickly, which will require both competitive pricing and enhanced benefits.
• Before it can launch the provider will have to secure approval from both the Health Insurance Authority and the Central Bank.
• It is unusual to trail the launch of an insurer when it does not even have a name or operations base.

About the Author

Ian Youngman is an independent writer and researcher specialising in insurance. He writes regularly for a variety of magazines, newsletters, and on-line services. He publishes a range of market reports, and undertakes research for companies. To read his latest report, International Health Insurance 2023, please click here, or visit the REPORTS section of iPMI Global.