The regulator of the health insurance industry has ruled out, for the present, the introduction of a controversial risk-equalisation scheme which would have seen millions of euro transferred from BUPA to VHI.
The Irish Times understands that the Health Insurance Authority has sent a preliminary decision to companies in the market in recent days stating that risk-equalisation payments should not be made at this time.
A spokesman for the Health Insurance Authority confirmed last night that a preliminary view on the introduction of the risk-equalisation scheme had been sent out to companies but declined to give details.
Risk equalisation is a form of compensation fund under which health-insurance companies with predominantly older members (who claim more frequently) would receive payments from their rivals with a younger subscriber base.
VHI has estimated that it could receive up to €20 million from BUPA Ireland if the risk-equalisation scheme was introduced.
BUPA has strongly opposed the introduction of risk equalisation but VHI has argued that the absence of the measure has led to higher premiums.
The Government believes that risk equalisation is a key component of a community-rated market where everyone pays the same, regardless of age.
The Health Insurance Authority assesses accounts submitted by the main insurers in the market every six months. If the level of risk difference between companies is greater than 10 per cent, the introduction of risk equalisation would definitely come into effect.
The authority has to make a recommendation to the Minister for Health, Mr Martin, if the risk difference level is between 2 and 10 per cent.
It is understood that the risk difference between the main players actually fell in the most recent six-month period and is at the lower end of the 2-10 per cent range.
In a statement last night, the the Health Insurance Authority told The Irish Times that it had notified insurers of the recommendation it intended to make on the introduction of risk equalisation to the Minister and that they had 21 days to make representations.
