Quinn Insurance may lose key contract
Irish Life & Permanent unlikely to keep underwriting deal if it buys healthcare division
Published 21/03/2011 | 05:00
QUINN Insurance could lose out on its lucrative contract to underwrite Quinn Healthcare's business if the health arm is sold to Irish Life & Permanent.
The news comes days after the Irish Independent revealed that Ireland's biggest life insurance company was one of the remaining bidders for the health arm of stricken Quinn.
Sources have now confirmed that if Irish Life & Permanent -- or any other company -- is successful, the new buyer is unlikely to be tied to keeping Quinn Insurance Limited (QIL) as an underwriter.
Under the existing arrangements, Quinn Healthcare sells and distributes about €300m worth of health insurance policies a year, but QIL does the insurance underwriting for that business.
New buyers would be free to auction out the underwriting to another provider or do it themselves.
Putting the underwriting out to tender is seen as the most likely option for Irish Life, since it would mean the company would only act as a distributor and would take on less risk.
This is seen as attractive since the health insurance market is in a state of significant uncertainty in light of the Government's commitment to bringing in a universal healthcare system.
If Quinn Healthcare goes to a joint bid by nationalised Anglo Irish Bank and Liberty Mutual, the existing underwriting arrangements are expected to remain in place.
Such a deal could trigger criticism about the Government's role in all three health insurance providers, since VHI is state-owned and almost-nationalised AIB owns a stake in Aviva Health.
As a standalone business, insurance sources say the health business may fetch as little as €20m, reflecting the infrastructure and book of policyholders.
The brand name is also an asset of the company, but is unlikely to be retained by the new owner given the reputational hit Quinn has taken since its descent into administration last year.