Health insurer BUPA Ireland is to withdraw from the Irish market. The company is blaming the move on a scheme known as risk equalisation - which compels it to pay rival VHI for covering a much older age group of consumers.
300 people who work for BUPA, mainly in Fermoy, Co Cork, have been told their jobs are at risk.
BUPA has been providing health insurance here for the past ten years. It now has 474,000 members - a 22% share of the Irish market. It has been warning for some time that it would pull out of Ireland if forced to make risk equalisation payments. These payments are intended to compensate the VHI for the extra cost of providing insurance for its much older age-profile consumers.
But BUPA, which has challenged these payments in the courts, insists that they have made its business unviable and are now costing it €1m every week. It says it made extensive efforts, particularly in the last few days, to find an arrangement which would allow it to stay in the market.
In a statement, BUPA says it will no longer accept new members and current memberships will not be renewed. It says anyone who is in hospital, or about to arrange any medical treatment, will remain covered. Members are entitled to transfer to another insurer with no break in insurance cover.
The managing director of BUPA Ireland, Martin O'Rourke, says Irish consumers are the real losers as the market will be restored to a virtual monopoly.
Minister for Health & Children Mary Harney said she very much regretted the decision to withdraw from the market. The Minister said community rating and risk equalisation were fundamental to Government policy and without these ground rules older and sicker people would not be able to afford private health insurance.
VHI said it was 'disappointed' to learn of BUPA's decision. In a statement, it said there was no economic reason for the decision. VHI said the move 'confirms our view that their strategy on entering this market was to take the windfall gains associated with a younger membership'.
The other operator in the market, Vivas, said that VHI was now 'perfectly positioned to kill all competition'. CEO Oliver Tattan said Vivas would fight to take on as many of BUPA's customers as possible.
'VHI has the benefit of a wide range of state protections and supports which will give it an unfair advantage in this fight,' he said, adding that the company now wanted clarity from Government on whether it now intended to 'further subsidise the VHI'.
