Health insurer cuts rates: PPP bucks trend as other big companies raise premiums. Sue Fieldman reports

SUBSCRIBERS to medical fees insurance must be wondering what on earth is happening to the cost of private health cover. Private Patients Plan, the second biggest insurer, announced last week that its premiums will be frozen or cut, while the three other main insurers are putting their rates up.

Traditionally, most medical fees insurers raise their premiums twice a year. But PPP has put the cat among the pigeons by announcing there will be no increase in premiums for its personal subscribers for the year starting July 1993.

Furthermore, premiums on the budget policies - the Value Plan and the six-week-wait Private Hospital Plan - will come down by 5 per cent. The reduction will affect about 250,000 subscribers.

Static or lower premiums will not come a moment too soon for PPP subscribers. Last year, they had to bear increases of between 5 and 33 per cent.

A PPP spokesman said: 'We are able to take this action because of cost containment.'

Bupa, the biggest insurer, has already announced premium increases of 6 per cent for personal subscribers. The figure for the July review is now under consideration.

However, Bupa says that the increase in premiums is on a downward trend. Norwich Union Healthcare has increased premiums on most of its private medical insurance plans by 10 per cent this week.

David Cavers, managing director of Norwich Union Healthcare, said: 'We have tried to keep premium increases to the minimum through careful cost containment with the medical providers we use.'

Western Provident Association will be putting its premiums up by between 8 and 25 per cent from April. Older subscribers will bear the brunt of the rises.

Julian Stainton, the managing director of WPA, said: 'We are holding the increases to the absolute minimum in line with increased medical costs. Unfortunately, the older policyholders are still claiming more than they are paying in.'

WPA is sending a letter to all policyholders suggesting ways to cut premiums.

Apart from the obvious tip of switching to policies with more restricted cover and lower premiums, Mr Stainton advised 'a little economic housekeeping' - paying your subscription annually saves you 11.5 per cent with WPA.

'In these times of reduced interest rates, particularly if your premiums are substantial, then the savings are well worth while. It may also be that you are over-insured for your area and can reduce your cover to a lower scale.'

Provincial hospitals now have extensive high-technology equipment, which is often on a par with or even better than that available in metropolitan areas. Mr Stainton said there was now much less need to 'go to London' for treatment than previously.