Black day as bupa exits ireland

From 14 Dec 2006, Bupa Eire, which has 475,000 client in the democracy, will no thirster accept new members, and the annual policies of members will not be renewed once they expire.

The move follows the loss last month of a High Court challenge by the insurance company against the introduction of the risk equalization scheme which would have involved Bupa paying a subsidy of of €161 1000000 over three years to rival VHI to compensate the latter for having a greater proportion of older, more expensive subscribers.

Bupa has tried to negotiate with the Irish authorities. The authorities also happens to own the main Irish insurance company VHI �" make of that what you will.

Bupa Eire managing manager Martin O'Rourke says "Irish consumers are the real also-ran as the marketplace will be restored to a virtual monopoly. Consumers have benefited from the pick, innovations and quality of service we have brought to the marketplace over the past ten years, and it is with great unhappiness that we must begin the wind-down of our concern."

The only other insurance company in Eire, VIVAS wellness, want to remain but have warned the Irish authorities that they are not prepared to compete with one hand tied buttocks their back.

Joseph Oliver Tattan, chief executive director of VIVAS wellness says “VHI already has 80% marketplace share. VIVAS wellness will fight to take on as many of Bupa’s client as possible however VHI has the benefit of a wide range of state protections and supports which will give it an unfair advantage in this fight. We are look for lucidity from authorities if it now intends to further subsidise the VHI with the €100 1000000 required to take on the Bupa client. In light of this most recent development in the quickly deteriorating wellness insurance marketplace, it is imperative mood that the curate for Health, Mary Harney takes immediate steps to make the necessary policy changes to ensure that the private health insurance market does not end up operating in a monopoly situation again. The Minister’s ill advised decision to trigger the risk equalization subsidy scheme has resulted in one of the three competitors in the market being forced to leave due to the fact that the market structure no longer allows fair competition. VIVAS Health is 100% committed to this market however, we need the environment that we are operating in to change in order for us to be able to continue to invest and innovate in this market for the benefit of consumers.”

The range of unfair advantages which the VHI enjoys, including the risk equalisation subsidy, the ability to operate insolvently, exemption from consumer protection regulation and the ability of the VHI to cross-subsidise products in a way no other European insurance company can, are very effective deterrents and are successfully keeping other investors out of the market.

Oliver Tattan added: “This is a bad day for the Irish consumer and a bad day for the health insurance market. We regret that Bupa is pulling out of the market’

A company with a 22% share of the market has been driven out. Bupa is currently arguing at the EU Court of First Instance that the VHI's risk equalisation requirements represent an illegal state aid under EU law. European Commissioners are not happy with the outcome and have warned the Irish government that allowing VHI six whole years to become solvent is not acceptable.

A VHI press release had a gloating tone and said "Bupa’s decision confirms our view that their strategy on entering this market was to take the windfall gains associated with a younger membership."

This story is far from over.