The regulator of the private health insurance market has told Tánaiste Mary Harney in a confidential report that it is in discussions with two potential new entrants to the market. This could mean five competing firms in the Irish market.
In a report submitted to the Department of Health at the end of last week, the Health Insurance Authority does not identify the companies involved.
However, it is understood that one is the HSA group, which provides healthcare cash plans. It indicated earlier this year that it was considering the launch of a private health insurance product.
Informed sources told The Irish Times this weekend that the other potential entrant involved "several well-known industry players".
Some 50 per cent of the population is now covered by private health insurance. There are three main companies, VHI Healthcare, BUPA Ireland and Vivas, currently operating in the sector.
In its report to the Tánaiste, which was based on financial returns made by companies in the sector in the six months to June, the Health Insurance Authority said that while VHI's membership appeared to be increasing, BUPA Ireland and Vivas "continued to comprise a significant proportion of sales in the market".
VHI has around 1.5 million members. It recorded a surplus of over €62 million in the 12 months to February 2004. However, this fell to just €3.9 million last year.
BUPA Ireland told an Oireachtas Committee earlier this year that it was set to make profits of around €17 million this year. However, it too maintained that profit levels were falling. Bupa Ireland has over 400,000 subscribers.
The disclosure about two potential new entrants to the market comes at a time when the authority has criticised one insurer for making excessive profits. In the report the authority also maintained that price following was taking place.
It said Bupa Ireland was making excessive or supernormal profits in Ireland. The authority said Bupa Ireland was making an operating surplus of 17.3 per cent of earned premiums, while in the UK Bupa Insurance Limited only generated profits of 5 per cent of earned premiums.
Bupa Ireland has rejected that it is making supernormal profits or that it has engaged in price following. Chief executive Martin O'Rourke said that its charges were so much less than those of VHI that the use of statistics could be misleading.
He also said that a report on the insurance sector produced by the financial regulator had shown that Bupa Ireland's profits were "way down the scale".
The Health Insurance Authority has recommended the introduction of a risk equalisation system.
