A new health insurance company yesterday raised the prospect of a price war in the Irish market by pledging to undercut its rivals by 20 per cent.
The Republic's third health insurer, Vivas Health, officially opened for business yesterday. Launching the company, chief executive Mr Oliver Tattan said it planned to offer 44 new health insurance packages to people in the Republic.
Vivas will use tailored packages to target three key groups: young single people, families and older people.
In some cases, it says that its charges are 49 per cent lower than the equivalent price quoted by its biggest competitor, the State-owned Voluntary Health Insurance (VHI).
For example, it is quoting €1,749 for cover that includes private hospital rooms for a family with two students and two children. A similar VHI package costs €3,461, while the market's other player, British health insurer BUPA, costs €2,535 - 31 per cent more than the new arrival.
Exact comparisons between the costs of various companies' health insurance plans are notoriously difficult to make, since very few packages include precisely the same benefits.
Mr Tattan said that Vivas would offer extra cover to consumers. This included cover for medical procedures outside the country or unavailable here, broader maternity benefits and insurance for new treatments.
However, the VHI yesterday signalled its intention to compete by announcing a new range of products. These are priced at between €412 for cover for single young people and €796 for older people.
The State company said it had been working on developing the new products for two years, and dismissed suggestions that it was trying to pre-empt Vivas's arrival.
Mr Aongus Loughlin, healthcare specialist with Mercer Human Resource Consulting, said Vivas's decision to enter the Irish market should benefit consumers.
"The arrival of Vivas Health into the private health insurance market in Ireland is welcome and should mean greater choice and price competition for Irish consumers as other providers respond to the new competitive challenge," he said.
Vivas is one-third owned by Mr Tattan and its management. The Republic's biggest bank, AIB, recently paid €7 million for a 30 per cent share, while financier Mr Dermot Desmond also owns one-third through his company, International Investment and Underwriting (IIU).
Mr Tattan is a former chief executive of the VHI and of the Irish Trade Board. He has been working on a number of projects with Mr Desmond and IIU since the late 1990s.
Yesterday, he claimed that consumers had lost out to a duopoly.
"The private health insurance market is characterised by lack of information, lack of competition and consumer inertia," he said.
