Harney move alarms insurance companies

Caroline O’Doherty

Bupa Ireland had already threatened to pull out of the country if the plans proceeded, while Vivas Health said last night the move would lead to higher prices for consumers.

The companies have 21 days to make their objections known to the minister before she gives final approval, but Bupa has already begun a legal challenge which is expected to be heard before the end of this month.

Ms Harney approved in principle the introduction of a system known as “risk equalisation” which will force insurance companies with younger, healthier and less expensive clients to compensate companies who have an older and more costly client base. In practice, that means Bupa, a relative newcomer to the Irish market, would have to pay millions of euro each year to the established operator, the former State monopoly, VHI.

Vivas would be exempt from the scheme in the immediate future under a special waiver for new entrants to the market but would be expected to compensate VHI in subsequent years until their level of risk and associated costs equalled out. In a statement, Vivas said it was “shocked and disappointed” by the minister’s decision.