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Reduction in Dutch health insurance premiums uncertain27 August 2013, by Alexandra Gowling
Despite Dutch insurance companies nearly doubling their profits last year, it is very doubtful whether health insurance premiums will fall next year, according to industry leaders.
In 2012, health insurers saw their profits more than double to 1,4 billion euros. In response to the figures, the Minister for Health Edith Schipper said was that there was a "social imperative" to conclude that higher income leads to lower premiums.
A premium reduction would also be welcome news for the government, as it keenly watches purchasing power levels in the Netherlands in its quest for 6 billion euros’ worth of additional cuts to the budget.
Lower premiums already
Last year, premiums in fact decreased by 1 per cent, to an average of 1.213 euros per year. Of the big four insurance companies, Menzis cut its premiums by 50 cents a month, while Achmea, operator of the Zilveren Kruis, Agis and Avero Achmea brands, froze its basic package premiums and raised them for top-up policies.
In fact, last year most companies either froze premiums or reduced them by a few euros annually, even though own-risk element for premiums rose by 120 euros a year.
But no lower?
Roger van Boxtel, CEO of insurance company Menzis, said that he wants nothing more than to lower premiums again, but that any further decrease in premium costs depends very much on the measures that the government presents in the Budget.
"Last year, we got there on Budget Day to find suddenly as insurers we had to pay 1 billion euros in expenses, partly because the government decided to pay training costs for medical specialists from the health insurance fund," he said.
The Ministry of Health has stated that there is no such burden for health insurers in this year’s agenda. Yet insurers still claim that they are being less and less compensated for the risks they run.
In response to the large profit figures, van Boxel said, "Many people have been saying over the last few months ‘they have made nice profits’. But if you want to be a healthy company, you need to have buffers."
He added that there are problems with the buffers that insurers are supposed to maintain, of which Dutch regulator De Nederlandse Bank (DNB) is also critical. "DNB naturally says: so, there are some risks coming up, let’s have a look at your solvency. You can’t then say ‘Well, we’ll reduce premiums now and next year we’ll massively increase them again'."
He added that as there are other factors at play behind the scenes, such as real estate prices, insurers only know two years after the fact what the exact costs were.
Finally, Chris Oomen of DSW, a small insurer that traditionally publishes the first health insurance premium of the year, has stated that he does not yet expect a premium reduction. It seems people in the Netherlands will have to wait another year to see one of their largest monthly expenditures reduced.