Oliver Tattan, chief executive of VHI competitor Vivas, described the failure of Bupa's European court challenge to the risk equalisation scheme as disappointing.
"The case was just one of many legal investigations under way at a local and European level," Mr Tattan said yesterday.
"The outcome of the other cases may not be known for a substantial period of time. Until all investigations are resolved, the market will continue to suffer from a lack of investment and from limited competition."
Seán Quinn-owned Quinn Healthcare, which bought Bupa's Irish business early last year, said there were still serious competition issues to be addressed in the Irish health insurance market.
"This lack of competition is clearly illustrated by the fact that there are only two private companies operating in the health insurance market compared to over 20 Irish and overseas insurers operating in the rest of the general insurance market in Ireland," the group said.
The Health Insurance Authority, which is responsible for administering risk equalisation, said the court's ruling that the scheme was necessary and proportionate reflected its view of the scheme.
Minister for Health Mary Harney welcomed the ruling. "Risk equalisation enables the provision of a level playing field for all consumers and insurers and allows for the protection of the consumer by facilitating community rating and open enrolment," she said.
Yesterday's judgment will not affect European Commission inquiries into anti-competitive practices in the Irish health insurance market, according to one expert.
The commission is investigating complaints from VHI's competitors that it has abused its dominant position in the marketplace and that it is straying outside its remit in offering products such as travel insurance.
Declan Walsh, lecturer in European competition law at University College Cork, said yesterday that the European court finding against Bupa would not affect the conduct of these inquiries.
However, he said that when the Supreme Court hears Bupa's appeal against a December 2006 High Court decision that also failed to overturn the risk equalisation scheme, the judges would bear in mind the European finding.
Bupa had challenged a commission finding in favour of risk equalisation on the grounds that it was an illegal state aid.
Mr Walsh added that the ruling was not a surprise, as the European Court of First Instance was following rules laid down in an earlier case, known as Altmark.
