Irish Life Health has announced it will increase the cost of its health insurance plans for new and existing customers by 4.5% from January.

The company's HealthGuide plans will remain at the introductory price from February, and the price of recently launched entry-level First Cover plan will also be unchanged at €464 per year

The insurer said the price increase was the result of "very substantial inflation" in hospital procedure plans in recent months.

“Like many parts of the economy, the hospitals have experienced significant increases in costs, which in turn has increased the cost of providing care to patients,” Irish Life Health said.

“The key contributory factors are the very material rise in energy and other supply costs, and the recent public-sector pay deal as it applies to healthcare staff.”

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The new prices will apply for new customers from 1 January and existing customers whose plans are up for renewal from the same date onwards.

“We recognise that these changes will be difficult for customers who are already experiencing price increases in many areas," said Ger Davis, managing director of Irish Life Health.

“Like many other parts of the economy, the healthcare sector and particularly hospitals, is now experiencing significant inflationary pressure which will impact health insurance claims costs.

“We are passing on the lowest possible increase we can, while ensuring that our customers continue to have comprehensive access to the care that they need.

“Maintaining this access is particularly important for our members as the healthcare system continues to experience significant challenges in dealing with the fallout from Covid.”

Dermot Goode, of Totalhealthcare.ie, part of the Lockton Group, said the decision was expected, and that the market was waiting to see which of the major health insurers would "break ranks first"

However, the vast majority of Irish Life Health customers renewing with the company will do some 31 December, meaning the price increase will not affect them until 2024.

"We know exactly the pressure the hospitals are under. We knew that was feeding into the negotiations with the insurance companies for increases for next year," he said.

Inflation in medical services options is still running up between 5-7%, so the fact that one of the companies has announced a price increase of 4.5% is not a surprise. I'd be advising all consumers of health insurance to budget for a minimum of 5% [extra] next year."

Goode warned of further potential increases after the announcement by Minister for Health Stephen Donnelly of an increase in the health insurance levy of approximately €32 from next April.

He expects other health insurers such as Vhi and Laya Healthcare to announce price increases in the first quarter of next year.

Goode advised consumers not to be complacent about their health insurance renewal, and that older customers who have stayed on the same plan for 10-20 years could save €500-1,000 per adult.

Young families should split their cover, whereby they only pay to insure their first child, with savings of up to €300 per child, and Goode also urged consumers to take on private hospital excess.

(Pic: Getty Images)