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Three in four fear price rises as Bupa quits Ireland
Conor Brophy



THREE-quarters of Irish people fear that health insurer Bupa's decision to pull out of Ireland will lead to higher prices for private health insurance, according to a Sunday Tribune opinion poll.

Respondents were asked the question:

Do you think that Bupa's withdrawal will lead to higher or lower prices for private health insurance or will it have no effect on current prices? The overwhelming majority, 76%, said they thought the move would lead to higher prices. Just 3% of respondents were of the opinion that it would lead to lower prices, while 12% said it would have no effect.

The poll results underline the level of concern over the impact Bupa's exit will have on the health insurance market.

Despite that concern neither of the two remaining health insurance providers, semi-state VHI and Dermot Desmondbacked Vivas, have raised prices or indicated any willingness to do so. In fact both have been competing aggressively to recruit Bupa's 450,000 customers. Bupa will continue to provide full cover for those customers until their policies expire but will not renew them.

Oliver Tattan, chief executive of rival Vivas Healthcare, said the company has been fielding ten times more enquiries through its call centres since Bupa announced it was pulling out of Ireland because of the government's controversial risk equalisation scheme.

Bupa maintains the scheme, which requires private health insurers to compensate the state-backed VHI for its older and less profitable client base, is disproportionate and would force it to operate at a loss if it remained in the Irish market.

Health minister Mary Harney remains committed to the risk equalisation (RE) scheme. Harney has, however, agreed to form an expert review group to examine the health insurance market in Ireland and assess the impact of risk equalisation on profitability. The department is expected to announce the make-up of the group and its terms of reference this week.

Both Bupa and Vivas have consistently maintained the RE scheme is a deterrent to competition. Tattan said his company remains committed to the Irish market but he is adamant that the scheme will have to be altered if new players are to be encouraged to enter Ireland. He said the review group would have to ask "whether companies can make a return on capital".

Last week UK insurer Axa signalled its intention to offer health insurance in the Irish market. The company, which held meetings with Harney and officials from the Department of Health on Thursday, said its preferred option was to acquire Bupa's business. Bupa has ruled out such a deal on the basis that it wants to reserve the right to re-enter the Irish market if the regulatory environment changes.

Late on Friday Harlequin Healthcare, which bought Mount Carmel hospital in 2006, emerged as another potential suitor for Bupa policy holders.

Higher prices seen as inevitable 'Sunday Tribune' / Millward Brown IMS Opinion Poll, January 2007 Will lead to higher prices Don't know / no opinion Will have no effect Will lead to lower prices




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