A stockbroking firm is being awarded a consulting contract to review the health insurance market in Ireland and VHI's role.
The previous government was committed to privatising VHI, the country's largest health insurer, but the new administration wants to keep it in state control, but is looking at splitting the company into two or three separate entities.
The new government is concerned that VHI's dominance of the market is putting healthcare providers out of business. The VHI has a market share of more than 60% of the health insurance market, but suffers losses because of its far older customer base than either Aviva or Quinn Healthcare.
Whether Quinn Healthcare can even survive is uncertain. Two of the three known bidders for it and underwriter Quinn Insurance (in administration) have new problems. Anglo-Irish Bank is being run down and will cease to exist as the Irish banking industry shrinks to two major banks and perhaps one small one. Irish Life and Permanent will now separate the banking and insurance arms, so buying another insurer is probably now out of the question. The only known possibilities are for Anglo’s US partner Liberty to make a solo bid, or for Zurich to buy it. But with the ever-deepening problems in Ireland, several EU and US banks are known to have looked at buying Irish banks at knockdown prices, but have still walked away from the deals as too risky.