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Spain: Does an excessive use of the health insurance double the insurance premium?

Álvaro Requeijo

24 March 2014
Several studies maintain that an increase in the use of the health cover is lately provoking sensible rises of the insurance premiums.

The first consequence of this fact is a general discontent of the policy holders and the subsequent launching of the debate on whether these premium rises are lawful or not.

The aforementioned premium rises have led to some "out-of-court" claims addressed to (the Spanish Insurance Regulator) the General Directorate for Insurance and Pension Funds (hereinafter the "DGSFP"), which has issued an opinion in this regard.

In that opinion, the DGSFP refers to Section 25.3 of the Private Insurance Regulation and Supervision Act (hereinafter "TRLOSSP") which mentions the insurance premiums to state that:

"The premium rates must be sufficient, according to reasonable actuarial assumptions, to enable the insurance company to meet all the undertakings resulting from the insurance agreement and, in particular, to establish adequate technical provisions. For this purpose, those premiums will meet the free competition system in the insurance market, so that the utilization of premium rates based on market common statistics shall not be deemed as a restrictive competition practice".

The DGSFP clarifies that the premium amount to which the Act refers, is the minimum amount possible. That is why the above mentioned Section 25.3 TRLOSSP expressly says that the premium "must be sufficient".  This wording constitutes a solvency guarantee, necessary for the satisfactory conduct of the insurance business.

In the particular case of Health Insurance Agreement, a year appears to be a usual coverage period. This implies that the updated premium takes into account the personal risk of the insured person during the covered year. As a consequence of it, the policies renewals entails premium increases, because every passing year the insured person has a higher risk of needing the health cover.

In brief, the annual premium rises do not necessarily imply an abusive practice of the insurance company, as long as the increase of the premium amount appears to be reasonable and according not exclusively to a higher utilization of the coverage but fundamentally to the increase of the age of the policy holder. In this regard some consumers have asked the increase to be calculated according to the Sanitary Consumer Price Index ("IPC Sanitario").

Álvaro Requeijo

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