If there are loopholes in current legislation that would allow a health insurance company like Vivas to avoid paying risk equalisation payments to the VHI, then the loopholes will have to be plugged, Minister for Health Mary Harney said yesterday.

Ms Harney said she was awaiting legal advice on this and other issues in relation to the manner in which the Irish health insurance industry operates.

But she rejected suggestions that she had delayed plugging loopholes in the legislation, amid claims that she had been advised several months ago by the Health Insurance Authority (HIA) about a possible loophole that could enable an investor like the Quinn Group to buy Bupa's Irish business but still qualify as a new entrant into the health insurance market here and thus avoid making risk-subsidy payments to VHI. "I have had no legal advice in relation to that matter. I am awaiting the legal advice," she said. The legal advice had been sought in December, she added.

"We are awaiting that legal advice through the Attorney General's office, and outside counsel have been asked to give us advice. There are many issues that arise here, not just the issue that's been raised in the public domain today [ the Vivas issue]. There are other issues that arise, there is the issue of the nature of the commercial transfer from Bupa to Quinn Direct. We are not certain what precisely the corporate route used was in that situation so all of the issues here have to be addressed," she said.

Asked about the Vivas claim that it can avoid making risk equalisation payments later this year to the VHI, to compensate it for its older customer base, by switching to a new underwriter, Ms Harney said if this was in fact legally the position, it would have to be addressed. "There are several loopholes that have to be plugged," she said.

The Quinn Group, in a statement yesterday, said the VHI's claim that its entry to the market put community rating at risk was absurd. "In response to the VHI's claim that its costs are higher as a result of the older age profile of its customer base, the Quinn Group wishes to state that it has no issue in providing cover to the same age profile as the VHI. In fact, a potential solution to this entire issue might be a proportionate rebalancing of each health insurer's book to reflect the same age profile."