BUPA Ireland has agreed to radically alter its products so it will be allowed to stay in the Irish health insurance market.
The company's controversial cash plans are to be immediately replaced and a new range of community-rated health insurance plans are to be introduced.
BUPA has also agreed to have "informal consultations" with the Department of Health before the introduction of its new products.
A spokesman for the Department of Health said last night that community rating had been protected "as far as possible". The new cash plans, he said, would be marketed "totally and absolutely separately" from the essential plan, which offered basic products to cover all treatment costs.
They would be "clearly designed" to compete in the already established cash plan market.
BUPA had offered subscribers the option of buying cash plans which would allow them to up-grade hospital accommodation or meet other associated hospital costs. Older customers were charged more for the plans.
After weeks of intense negotiations, agreement was reached yesterday evening between the British health insurer and the Department of Health.
Announcing the agreement, the Minister for Health, Mr Noonan, said he welcomed the fact that "BUPA had reaffirmed its commitment to community ratings which is the core value of the Irish health insurance system". As regulator, he welcomed the competition that would be created for the benefit of the consumer.
The chairman of BUPA, Dr Margaret Downes, said she was delighted at the outcome of the negotiations. BUPA was simply extending its range because there was a desire to retain community rating and at the same time it was studying and revising its cash plans.
The essential scheme would remain in place. Existing customers had a contract and that would be honoured. "Hopefully" the cost of the essential plan would remain the same, she said.
Full details of the new BUPA health-care products or cash plans are not yet available. They are expected to be on the market by the summer. But Dr Downes said she expected the new cash plans would be very similar to the current ones, still age-related but with different cash benefits. Despite the uncertainty, she said, a large number of people had been signing up in the past few weeks.
Last night the VHI said it welcomed competition which adhered to the Health Insurance Act 1994 in which community rating was enshrined.
"VHI welcomes the statement from Mr Noonan in which he reiterated his commitment to maintaining the principle and practice of community rating in this country."
The Fianna Fail spokeswoman on health, Mrs Maire Geoghegan-Quinn, said she "failed to see' why the informal consultation arrangements between BUPA and the Department had not been established last year when the company first announced it was entering the Irish market.