Health insurer Bupa Ireland is fighting moves to trigger "risk equalisation" in the Irish market and claims the development will cost it €34 million in a full year.
The rapidly-growing company is understood to be arguing that that such payments would amount to a subsidy to the State-owned Voluntary Health Insurance (VHI) company.
At €34 million, the payments would be greatly in excess of the €25 million reported last month as the likely risk equalisation cost to Bupa Ireland in a full year.
The firm has never revealed a profit figure for its Irish operation, although regulatory filings in the UK suggest its premium trebled to €115.1 million in 2003 from €41.1 million in 2000.
Bupa Ireland has to meet a deadline today to explain to the Health Insurance Authority why it should not introduce risk equalisation in the Irish market.
Such payments would have the effect of compensating VHI for the higher age profile of its customers vis-a-vis those of Bupa Ireland, its biggest rival.
Bupa Ireland is understood to be arguing that such payments would make it impossible to compete in the Irish market.
It follows from that line of argument that the company might claim that its Irish business would not be viable if it had to make the risk equalisation payment to the authority. The money will go into a fund administered by the authority which will, in turn, pass the bulk of it on to VHI.
The authority is considered unlikely to change the decision on the basis of any new submissions it receives. It will make make a recommendation in due course to the Tánaiste and Minister for Health, Mary Harney.
While it is open to Ms Harney to veto the move, that is considered unlikely.
After a review of the industry for the second half of last year, the authority said risk equalisation should be triggered for the first time because VHI's customer profile now poses a risk to the stability of the industry.
VHI has more older customers than Bupa Ireland, with a result that its customers are more likely to make claims on their health insurance policies than those of its rival.
While the authority will examine market conditions in the January to June period next autumn, annualised risk equalisation is likely because insurance contracts are long-term contracts by nature and the VHI's risk profile is likely to remain high.
The newest market entrant, Vivas, will not be faced with the payments because it entered the market only last autumn.
Under current legislation, risk equalisation payments cannot be levied on insurance companies that have been in operation for less than three years.
