Industry: Bupa cut its losses and exits Irish market in wake of legal ruling
By Lucy Quinton
Mounting speculation over the last couple of years has finally come to a dramatic close as Bupa has made a 180-degree U-turn and pulled out of Ireland.
Bupa said the decision had been forced due to the scale of the payments required under the risk equalisation scheme (RES), which was costing over £1m each week. Back in June 2005, Sean Murray, director of marketing at Bupa Ireland, said in an interview published by COVER: "We will not leave the market voluntarily; we can only be forced out." However, following the latest development Murray was not available for comment.
Bupa's decision followed an Irish High Court ruling on 23 November 2006 stipulating that, over a three-year period, it would require Bupa to make risk equalisation payments for the sum of £161m to its main competitor, VHI, the Government-owned insurer.
This would be more than double Bupa Ireland's estimated surpluses over the same period.
The Bupa spokesperson said: "It will no longer accept new members and current members will not be renewed. This is the first step in the closure of the businesses. Bupa Ireland will now begin to wind down its activities in Fermoy and Dublin. Current members who have recently renewed will remain fully covered. Members will continue to be provided with a comprehensive, quality service until all contracts have expired and claims under those contracts are settled.
Val Gooding, chief executive at Bupa, said: "Bupa Ireland is a commercially successful business that has also delivered significant benefits to Irish consumers and the broader Irish healthcare economy."
He added that it decided to close because the level of RES payments proposed would make Irish business unviable.
This exit appeared to be a last resort after Bupa met with the Irish Minister for health and children and wrote to the Irish Prime Minister.
The health insurance provider, with its strapline of "feel better with Bupa", has 300 staff who may face job uncertainty as a result of this move. The spokesperson could not be drawn on whether their jobs were at risk but commented: "Every effort will be made to minimise the impact on them."
Its main competitor in Ireland, Vivas, could gain from Bupa's exit from Ireland. However, the company was unable to comment on the situation or whether it would also pull out of Ireland.
Vivas' website holds a link specifically designed to help customers wanting to switch from Bupa. It was unable to comment on what percentage increase in business it expected as a result of its main competitor's exit.
