Health insurance firm VHI has entered the life insurance market, under the VHI Life brand.

The move comes after the Central Bank granted it authorisation last year that allowed it to enter new markets, moving outside the health business and into broader financial services.

VHI's move would be seen as a response to rival Laya Healthcare's decision recently to expand its offering into life insurance. Meanwhile, Irish Life, the market leader in the life and pensions market, is making the reverse journey by acquiring Aviva Health in Ireland and merging it with GloHealth, in which it was already a major shareholder.

These various moves will stiffen competition in both the health and life insurance sectors.

“Life insurance fits very well with our overall customer offering and supports our business strategy for the future,” VHI group chief executive John O’Dwyer said. “The number of people with life insurance in Ireland is low with people significantly underestimating the impact that the loss of a spouse or partner can have on a family’s lifestyle.”

Underwritten by Zurich Life, VHI plans to initially target families, offering flexible products that will allow customers to increase cover for life events such as marriage, the birth of a child or moving house, without additional assessment, and also to extend cover more easily.

“We believe there is a strong opportunity to grow the overall life insurance market and we believe that VHI is in a unique position to leverage our own existing customer relationships, brand strength and direct distribution capability to develop a significant life insurance business,” Mr O’Dwyer said.

State-owned VHI is Ireland's largest health insurer with about 1 million customers. Laya, which is owned by US financial services giant AIG, is number two in this market with Irish Life, owned by Canada's Great-West Lifeco, set to become the number three player.