VHI raising prices by an average of 9pc

The insurer said the increase will be effective from 1 March 2012 for most plans. It said the price increase is necessary to fund the healthcare needs of its customers.

“The sole purpose of the price increase is to cover our customers’ healthcare costs in the coming year,” said the company’s chief executive, Declan Moran.

He said the two key factors contributing to the increase are an increased demand for healthcare and the fact that its “private health insurance business is currently loss making, the market has contracted and we need to ensure the organisation is sustainable”.

Moran said VHI’s average claims cost per customer has increased by 15pc since 2009 (from €851 to €980). 

“We are acutely aware of the enormous financial pressures facing our customers and have endeavoured to keep the price increases on our plans as low as possible,” he said. “In particular we have sought to keep our family plans affordable for as many families as we could.

“Today’s price increase is the lowest possible amount we could introduce to ensure we can meet the cost of our customers’ healthcare needs in 2012.  VHI Healthcare also needs to be sustainable into the future with a view to achieving financial regulation as required by the recent ruling of the European Court of Justice. This is a strategic imperative for us.”

The company said it will not be passing on the recently announced increase in the private health insurance levy to its customers.  It added that older customers “continue to be significantly loss making and until such time as a comprehensive risk equalisation scheme is introduced which makes it as attractive to insure an older, sicker person as a younger, healthier person the market will continue to segment”.