Health insurance company Bupa is to pull out of the Irish market, it announced this afternoon.
From today the company, which has 475,000 customers in the Republic, will no longer 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 insurer against the introduction of the risk equalisation scheme announced by the Minister for Health Mary Harney last year.
The scheme was to have involved Bupa paying a subsidy to rival VHI to compensate the latter for having a greater proportion of older, more expensive subscribers.
The company, which has been operating in the Republic for the last ten years,
told the High Court that the equalisation scheme was a barrier to carrying on its business and that it would expose the company to liabilities of €161 million over three years.
In today's statement, Bupa Ireland repeated that claim and said it had made "extensive efforts" to find an arrangement that would enable it to stay in the market.
It said the decision had "been forced on it" due to the scale of the payments required under the Risk Equalisation Scheme which, the company said, is now costing over €1 million every week.
Ms Harney said she regretted the move but said that "we cannot have a health insurance market in Ireland which does not respect community rating".
She said her department had been in discussions with Bupa for the last ten days but could not convice it to remain in the market.
She said she was "really really sorry" the company had take the decesion it had.
Bupa Ireland managing director Martin O'Rourke said Irish consumers were "the real losers as the market will be restored to a virtual monopoly".
He said consumers had benefited from "the choice, innovations and quality of service we have brought to the market over the past ten years, and it is with great sadness that we must begin the wind-down of our business".
Bupa employs 300 people in Fermoy and Dublin. Mr O'Rourke said they had been informed of the implications of the closure and that everyone in the organisation had been given "at risk" notice. "We will need some people to service existing contracts and claims as we wind down," he said.
Minister for Enterprise, Trade and Employment Michéal Martin said he very much regretted Bupa's decision to leave the Irish market.
"The decision to close a profitable operation is deeply disappointing. The top priority must now be the needs of the workers in Fermoy and elsewhere," he said.
"I have instructed the State Agencies to provide every possible support to the workers. The timing of this decision, in the run into Christmas, is a bitter blow for the workers and North County Cork."
Current Bupa members who have recently renewed will remain fully covered. Anyone who is in hospital or about to arrange any medical treatment remain covered.
"Members will continue to be provided with a comprehensive, quality service until all contracts have expired and claims under those contracts are settled," the company said.
No new members or renewals of membership will be accepted from today.
Members are legally entitled, if they wish, to transfer to another insurer with no break in insurance cover.
Today's announcement was described as "a bad day for Irish consumers, a bad day for Irish jobs and a bad day for competition in the health insurance market" by Fine Gael's health spokesman, Dr Liam Twomey.
"This is a regulatory failure. It is a failure by the Fianna Fail/PD Government to strike a balance between the issues of community rating, risk equalisation and competition in a way which delivers to the Irish people," he said.
