Vivas complains of State role in VHI

THE latest entrant to the health insurance market, Vivas health, has complained to the European Commission that the State is protecting the VHI from real competition.

Vivas is claiming that the State-owned VHI has an unfair advantage over its competitors because it does not have to comply with the same regulatory requirements.

In particular, the VHI was able to "tie in" customers by offering deals on non-health insurance products, a practice denied other insurers who operate under licence from IFSRA.

Vivas's chief executive Oliver Tatton said the VHI could sell everything from bubble baths to travel insurance.

"We cannot under our corporate structure sell anything but health insurance." He claimed the VHI, which controls 80% of the market, was not obliged to carry solvency reserves other companies are required to do to cover emergencies.

Mr Tatton, who is a former chief executive of the VHI, also claimed that the company had been recklessly running down its reserves in recent years at a time when regulators were imposing tighter regulations on competitors.

He said the VHI was not playing on a level playing field the body was controlled by the Department of Health and Children and, therefore, not obliged to adhere to any consumer protection regulations.

While exempt from IFSRA in the health insurance market, the VHI is subject to the regulator in the sale of other financial services.

A spokesperson for the department said legislation would be published this year to address issues relating to the VHI's corporate status.

VHI chief executive Vincent Sheridan said he believed the complaint by Vivas was really a publicity-seeking exercise.

"There is nothing that we are doing that they can't do," he said. "But I do welcome the complaint that we are bringing innovation into the market.

"They are hiding behind a technicality and saying that Vivas can't do it. It's like saying a bank can't get involved in life insurance, but they are because they have set up subsidiaries. Vivas can do the same."

Vivas was well aware that the big issue in health insurance was the regulation of the market and the introduction of risk equalisation.

Mr Sheridan said the health insurance authority had indicated it was going to recommend to Health Minister Mary Harney that risk equalisation should be introduced before the end of the month.

Vivas whose principal shareholders include Mr Tatton, financier Dermot Desmond and AIB Bank, was launched on the Irish market last October. It is the only commercially driven company as both BUPA and VHI operate on a not-for-profit basis.