Competition in the health insurance market is heating up with VHI announcing cashback as an incentive to customers to do more transactions online. It comes on the back of three separate price reductions from the health insurer since last November, the most notable being an average 7% reduction from March 1.

Dermot Goode, health insurance analyst with Total Health Cover, said the cashback initiative is a simple process. Policy holders logon to VHI.ie and click on 'online advantage' to register for direct debit and "edocs". "If they register for both then any single adult will qualify for €100," he said. "A typical family of two adults and two children will qualify for €150 - a nice cash bonus for members in September just as the children are returning to school."


The cash incentive by VHI was an  unexpected announcement. "It is quite unprecedented to see an insurance company offering an incentive that will apply to each individual member. We have not seen that before," Dermot Goode said.

Mr Goode said health insurance companies want to get their customers engaging with them online. "To be fair in the health insurance sector, there are loads of new services that you can access. You can get digital doctor, you can send in your claims online, you now have webchat. I think VHI, with most of the older members, have realised, that especially following GDPR, they need to get consent from their members to offer such services"

The health insurance analyst said people need to understand that this has nothing to do with their policy and the quality of their cover. The risk with this incentive is that a lot of people will associate this with a reduction in their premium. Mr Goode said that it is completely separate. "We would still urge everybody who has health insurance to definitely shop around."

He said the initiative is going to help VHI in terms of retention and in terms of loyalty building, "because there has been a lot of bad press coming from VHI in terms of rate increases, but they have completely turned that around since last November, and now we're in the middle of a price war". 

Irish Life are reducing their rates on June 3, then VHI have another reduction coming on July 1. The market is waiting to see if Laya will respond. "Most customers will see their prices reducing," Mr Goode said, "but that still doesn't change the fact that four out of five people are still on the wrong plans, they still need to shop around, but don't miss this bonus. This is a once off bonus, that they're going to get straight into their bank accounts."

Health insurance companies have already been doing quite a lot in the online and digital space. Aviva Health and Glohealth were the first ones to bring in "snap and send" where you send in your receipts online. They were the first to introduce digital doctor, and other insurance companies have followed. Mr Goode said he was aware of lots of new services that health insurance companies are going to bring in but they will all be online. "They want you to engage with them online because they can push services depending on your preferences," he said.

"I feel sorry for a lot of older people who might not be comfortable with doing business online and receiving all their documentation by email. They don't necessarily have to, but I would encourage them to look at switching because otherwise they're going to miss out on those services," Mr Goode said. "For example, you can go to the doctor today, and take a picture of the receipt and click submit and it goes straight to your insurance company and the refund is in your bank account within three to four working days, rather than waiting until the end of the year. That's the kind of service that's available now," he added.

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