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Premium hike hits late insurers

More than 5,000 late entrants missed last year’s deadline to buy health insurance for the first time, and face penalties that will average €140 a year for the rest of their lives.

According to the Health Insurance Authority (HIA), the industry regulator, 5,000 people paid lifetime community rating loadings of €711,000 last year. This will add about €140 a year for life to the cost of their premiums, which averaged €1,173 per person last year.

Another round of premium hikes is expected this year, with VHI raising prices by 3% on a range of health plans renewed from November. Similar increases are expected from other insurers.

The lifetime loading was introduced by the government to encourage more people to take out health insurance before reaching the age of 35.

Insurance companies need more young subscribers on their books to help underwrite the cost of insuring older people, who account for the bulk of claims costs.

The average cost of a claim by those over the age of 80 is more than €5,000, according to the HIA, compared with less than €500 for somebody in their thirties.

Close to 100,000 people took out health insurance last year, with many rushing to buy cover before the penalties were introduced for late entrants buying cover for the first time after April 30, 2015.

The influx pushed the proportion of the population with health insurance to 46%. Coverage peaked at 51% of the population in 2008 before falling sharply as people were forced to abandon cover when they lost their jobs in the downturn or were priced out of the market by rising premiums.

Loadings are calculated at 2% for every year that a new customer’s age exceeds 34 years. A person buying cover for the first time at 45, for example, would have to pay 22% extra for health insurance for the rest of their lives.