Tuesday, 14 February 2012
Department of Health
Question 721: To ask the Minister for Health the circumstances under which a health insurer can demand the balance of the insurance premium when the contract is terminated between renewal dates; and if there are any restrictions on this, or a limit on how much can be charged. [8207/12]
While insurers provide a facility to consumers to pay premiums over the policy year, rather than at the start of the policy, this does not change the twelve month nature of contracts. Health insurance contracts are normally written for a term of one year. Like any contract, if a policyholder wishes to cancel their health insurance contract, the cancellation is subject to the relevant terms in the policy contract, provided the contract allows for mid term cancellation. If the policy contract does not allow cancellation during the term of the year, an insurer can seek to enforce the contract under contract law and demand the balance of the year’s premium. All open market insurers give a 14 day cooling off period where they will cancel the contract and give a full premium refund. It is important to note that customers are free to cancel and change their policy at their renewal date without difficulty.
In respect of policies renewing or commencing in 2012, the current Scheme of Age-Related Tax Credits and Community Rating Levy provides for the payment by insurers of a levy of €285 per adult. It should be noted that, where customers leave before the twelve month insurance period expires, the insurer incurs a loss in relation to the levy paid as the levy may only be collected once. If a policy is cancelled mid policy year, insurers cannot reclaim a proportion of the levy. Where a policy holder switches to an alternative insurer, the second insurer does not have to pay the levy in respect of the replacement policy, if the two policies commence in the same accounting period. In this regard, accounting periods are normally the twelve month period starting on 1 August and finishing on 31 July.