Health insurance market ‘lacks real competition’

WITH just two players left in the health insurance market there could be problems in generating real price competition, a consumer watchdog warned yesterday.

Irish Consumers’ Association chief executive, Dermott Jewell, feared that the situation would result in consumers not getting cheaper health insurance.

The consumer chief also had little sympathy for BUPA, pointing out that the British-based insurance body had entered the Irish market in the full and clear knowledge that they would have to pay into a risk equalisation fund.

Mr Jewell also said that decision to divide up the VHI into smaller companies was a matter for the Government but hoped that policy holders would not end up funding the development.

VIVAS founder and chief executive, Oliver Tatton, said they intended competing strongly with the VHI for BUPA’s 475,000 existing subscribers.

“We can give an assurance that we will be offering real competition. We have been offering it for the last three years and will continue to do so,” he said.

He believed, however, that consumer bodies should be crying out for more competition because two players were not enough.

And while he respected the “pro-competition” reputation of Health Minister, Mary Harney, the Government had done nothing to enhance competition in the market.

Mr Tatton also described as a “complete red herring” reports that the VHI was going to be broken up into smaller companies.

“What is the point of having four or five baby VHIs who are all owned by the State. Do they want us to pay risk equalisation to all four of them?” he asked.

Whether or not the VHI was broken up, steps should be taken immediately to make the insurance body fully solvent and regulated, Mr Tatton stressed.

He added that the Government needed to consult with potential players in the market and VIVAS as to what was a fair form of risk equalisation and how it should be implemented.

“I have no problem with risk equalisation but it needs to be fair,” he said.

Meanwhile, VHI chief executive, has circulated a letter to all staff pointing out that any debate on the break up of the insurance body would have to provide reasoned arguments based on advantage to consumers.