Insurance, as shown by Irish trends on utility and bank switching behaviours, exploits customer inertia. Once an individual has signed up for an insurance policy, they often find it hard to change. This is particularly true in the health insurance sector where over 350 options can cause decision paralysis to those exploring better value alternatives. The Health Insurance Authority (HIA), the sector’s regulator, backs up this tendency whereby customer inquiries on switching plans constituted less than 1 per cent of its overall calls, as shown in their most recent report.
The concept seems applicable to the automatic enrolment pension scheme; however, its actual practicality remains uncertain. In a market dominated by inertia, businesses aim at keeping their customers from reconsidering their affiliation. Contrarily, Ireland’s largest private health insurer, VHI, has recently urged its customers to do just that by discontinuing four of its offerings. Two of these, Health Plus Access and Health Plus Extra, formerly Plan B and Plan B Options, have been amongst the most favourable ones with long-standing consumer approval.
Consequently, VHI’s decision offers its 130,000 consumers, constituting nearly 11% of its clientele, a reason to explore other options including those given by its competitors such as Laya Health and Irish Life Health. As industry experts indicate, VHI’s newly introduced plans provide almost identical coverage at competitive prices. However, they do differ markedly from the top 30 private health plans that cater to half the country’s 2.5 million private health insurance consumers, two of which are soon to be eliminated.
Which begs the question. If VHI’s aim is to create “a simplified product structure”, why discontinue the widely popular choices instead of the less favoured ones which provide similar coverage? If their intent is to focus on “enhanced offerings to better meet member’s needs,” couldn’t they just periodically refine the existing popular plans? Or could there be more to this strategy than meets the eye?