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New health insurer plans to undercut big three's prices

A FOURTH health insurer is preparing to enter the market in the summer, with plans to undercut the premiums being charged by the existing players.

The new company is headed up by former Aviva boss Jim Dowdall and has the financial backing of Irish Life and the German re-insurance giant Munich Re.

It wants to target tens of thousands of people who are turning away from health insurance because of rising costs, and will also try to poach customers from the other three big players.

The new group has already had talks with the Department of Health and the regulator, the Health Insurance Authority, the Irish Independent has learned.

A new player in the market will provide a welcome boost for customers who have been hit hard by hikes in premiums -- which now average €2,400 a year for a family of two adults and two children.


It is understood the group sees a huge opportunity to offer lower premiums as there are two million people with health cover and just three players.

In contrast, there are 20 different general insurers in the market.

And a new operator will in turn push rivals VHI, Aviva and Quinn -- now renamed Laya -- to drop their premium prices.

Health premiums have shot up by 50pc in the past 18 months, putting a huge squeeze on household budgets.

Some 6,000 people a month are being forced to give up private medical insurance.

But a new player would bring fresh competition into the market, try to pick up some of these customers, and force the existing players to react.

It is understood the new group will not need a licence from the Central Bank as it will operate here under a "passporting" rule that allows companies with licences in EU countries to operate across borders.

The new health insurer is set to use Munich Re's Great Lakes health insurance licence from Britain to operate here.

Investors in the new health insurer include Irish Life and Munich Re, along with the original founders of Vivas, which was bought in 2004 by Aviva.

The group will be headed up by Mr Dowdall, with fellow Vivas founder Stephen Loughman also involved. Former VHI boss and a founder of Vivas Oliver Tattan is also an investor.

Munich Re is on course to make profits of €2.4bn this year.

It is investing in the new group and providing re-insurance services. This is where the larger company takes on some of the insurance risks of the initial health insurance provider.

A small number of health insurance products are expected to be launched initially, with premium prices below those being charged by the existing players. Better benefits are also expected to be on offer.

The move comes as healthcare provider Quinn has rebranded as Laya and introduced two new insurance plans as part of its own drive to attract customers.

It will be offering three months of cover free for those who switch to them this month.

The discounts on the Health Smart and Health Smart Family fall to two months for those who sign up for them in July.

Health Smart costs €775 per adult for those who avail of the special offer. It offers good value for those who want a semi-private room in a private hospital, according to Dermot Goode of healthinsurancesavings.ie.

Laya also said it will be creating an additional 100 jobs in Cork over the next three years.

Donal Clancy, managing director of Laya, said it was an exciting day for the private health insurance market.

"All of us involved in the sector recognise that there are significant issues and problems which need to be resolved," said Mr Clancy.

Irish Independent