ECONOMY

Hikes in health premiums on the way

hikes-in-health-premiums-on-the-way

The cost of compensation paid by insurance companies for treatment based on the single health index compiled annually by the Foundation for Economic and Industrial Research (IOBE) is seen as a harbinger of steep price hikes in the insurance premiums of long-term health programs, to the tune of up to 11%.

The course of the index, as compiled and monitored by IOBE, shows that compensation costs paid by insurance companies in 2019 increased significantly, and specifically by 10.9%. This, in turn, means that insurance companies can impose similar increases on specific insurance policies. 

Large companies, such as National Insurance, NN and MetLife have already decided on hikes of up to 6% for 2021 (along with the increase due to the age of the insured). 

What’s more, the cost spike has created the conditions for greater increases in hospital programs in 2021 or 2022, and over the coming years if it continues.

According to the IOBE study, 2019 was the year that saw the largest annual increase in the cost of compensation since 2011, when the monitoring of the index began.

The average compensation rose from 2,938 euros in 2011, to 3,417 euros in 2018 and 3,724 euros in 2019.

Tellingly, from 2011 to 2019, the number of people insured with lifelong hospital plans decreased from 711,000 to 344,000, or 55%, as they were gradually withdrawn as unprofitable. However, while the insured in this category decreased by 55%, the compensations paid by the insurance companies decreased during the same period by only 24% (from 295 million euros in 2011, to 223 million euros in 2019).

This is also due to the fact that, apart from the increase in the cost of treatment, the insured get sick more often as they grow older. The rate of sickness rose from 14.1% in 2011  to 17.4% in 2019.

The IOBE index is expected to be one of the main criteria that will be incorporated in the presidential decree to be issued by the Development Ministry regulating insurance premiums.

The adjustments of insurance premiums in lifelong health contracts will be determined based on the index.

These adjustments concern old contracts, which, in contrast to the annually renewed one, bind the insurance company for the entire life of the insured.