Ireland is a very unusual market for health insurance. There are only three insurers - VHI, Vivas and Quinn. But there are no fewer than six current court cases.
The legal position is complicated and unsure. Many expat/ international insurers will not cover UK expats resident in Ireland. Others will, but privately admit that there is so much going on there that any week could see their cover made illegal, by a new decision by EU or Irish courts.
This week could see a decision, which could open up the Irish market, or close it for good to any outsiders.
The European competition directorate has agreed to investigate the VHI’s alleged breach of competition rules as it dominates in the Irish health insurance market.
VHI rival Vivas Health made an official complaint, following publication of the Competition Authority’s report on the private health insurance market a year ago. The report, requested by the Minister for Health, said VHI had a regulatory advantage, because of its exemption from regulation by the Financial Regulator.
The authority recommended that VHI should become subject to the legal solvency requirements and corporate structuring rules that applied to all other health insurers in Ireland, and every other EU country.
Bupa, which sold its Irish business a year ago to the Quinn Group, had already challenged a 2003 European Commission decision, that the risk equalisation scheme did not constitute illegal state aid.
Under the scheme, other health insurers make massive payments to VHI to compensate for the older profile of its customer base. The Court of First Instance in Luxembourg will give judgment in that case on Tuesday 12 February.
When Bupa left the Irish market, Sean Quinn, chairman of the Quinn Group, said VHI was ‘‘trading illegally without the required solvency, is charging far too much for its products and is being propped up by the Irish taxpayer without any accountability’’.
Quinn said VHI had ‘‘an extremely loyal customer base’’ and was charging much higher premiums, so should not need risk equalisation payments. As a new entrant to the health insurance market, the Quinn Group was initially exempt from making risk equalisation payments for three years, but the government introduced emergency legislation - backdated ! - to remove the exemption.
Oliver Tattan, chief executive of Vivas, said: ‘‘Our complaint relates to the fact that VHI had below-cost price increases as we entered the market, just to damage our business. We have also taken a number of other issues to DG Competition in Brussels, as it’s completely unfair that VHI does not need to be solvent. If Bupa wins its case on Tuesday, then risk equalisation is gone, and I would say that other insurers would be attracted into the Irish market. That would put a downward pressure on prices and an upward pressure on medical innovation.”
An ultra defensive VHI said: ‘‘we have dealt with the issues raised by Vivas Health, and VHI believes that its whole submission should be dismissed, as it has no foundation.”
The Department of Health said that the committee stage of the VHI Amendment Bill was scheduled for February 27. The bill does not deal with risk equalisation, but provides for VHI attaining the solvency requirements of the Financial Regulator.
Bupa still has two court cases pending in Ireland. It is awaiting a judgment from the Supreme Court, appealing the High Court ruling, which upheld risk equalisation, and it is pursuing a judicial review on the minister’s decision to trigger risk equalisation.
Quinn also has two judicial reviews pending: on the removal of the exemption for new entrants to the market and on the validity of the risk equalisation scheme.
VHI has around 76 per cent of the health insurance market in Ireland, while Quinn has 17 per cent and Vivas 7 per cent.