Rival to step up campaign for customers

Reaction: VivasThe chief executive of Vivas, the remaining competitor to State monolith VHI, said yesterday he would favour the transfer of Bupa Ireland's 475,000 customers to his company.

Reacting to the news that Bupa is exiting the Irish market, Oliver Tattan said that if the Government were to allow VHI to recruit Bupa's subscribers, it would amount to an effective €100 million subsidy for the State health insurer.

He said that in order to ensure they met their liabilities, private sector players had to keep cash reserves equal to 40 per cent of their premium income, while VHI would not have to do this until 2012. Bupa's reserves came to €104 million.

Mr Tattan said Vivas planned to step up its campaign to recruit people forced to leave Bupa.

He and other industry figures said the news that the British-based health insurer would begin winding down its operations today in advance of pulling out of the Irish market was bad for consumers and would hinder development. "Nobody else is going to come into this market in these circumstances," Mr Tattan said.

Aongus Loughlin, head of healthcare and risk consultant with Watson Wyatt, said Bupa had brought competition to the Irish market. "They managed to recruit close to 500,000 in 10 years." He said Vivas offered an alternative to VHI, as its packages were similar but it charged less and offered more innovation.

Bupa said it was leaving because the risk equalisation subsidy it was required to pay to VHI would have wiped out its profits.

Mr Loughlin said he agreed with the principle of risk equalisation, but the Government could have looked at alternative methods. "In the state of New York, they have a risk stabilisation scheme, which means that the number of older subscribers is divided equally between insurers," he said.

VHI chief executive Vincent Sheridan said the company regretted Bupa's exit from the market. "We were looking forward to competing with them without one hand tied behind our back," he said.

He said the delay in introducing risk equalisation had resulted in losses of €30 million last year for his company.