The Minister for Health Mary Harney said tonight it was a matter for the Health Insurance Authority to decide if the Quinn Group would be liable for risk equalization payments following its purchase of the customer base, staff and business of Bupa Ireland.
The owner of the Quinn Group Sean Quinn said he would not have to pay the levies as the company would be a new health insurer under his ownership and therefore exempt from the scheme for three years.
However, Minister Harney, who insisted she had no prior knowledge of the deal, said: "Clearly there are risk-equalisation liabilities which BUPA have built up to now and they'll have to be paid over".
It was not immediately clear who would be expected to pay the liabilities under the agreement hammered out between Quinn and BUPA over a matter of days.
"In all of our businesses, we operate in an open and competitive environment, and we trust that the report of the review group established by the Minister for Health, Mary Harney TD, and other initiatives, will lead to a more open and competitive landscape in this market," Mr Quinn said.
BUPA said they were in talks with the Government until as late as last week in failed attempts to continue its business in Ireland.
Neither is it known how much was paid for the health insurer just weeks after it spurned an approach by AXA, a major competitor of BUPA in the UK market.
According to Ms Harney, Mr Quinn approached BUPA last Friday, met with them on Saturday and concluded the deal today. Bupa's decision to leave the Irish market followed a High Court ruling on November 23rd that BUPA would have to make so-called "risk-equalisation" payments to the state-owned health insurer VHI to compensate for VHI's older client base.
Risk equalisation is a process by which insurers with a higher number of elderly customers who tend to make more claims are compensated by insurers with fewer elderly customers. BUPA said it will continue to accept new business and honour all existing contracts and renewals during the next few weeks while new arrangements with Quinn Group are put in place.
In a statement this evening Vhi Healthcare said it welcomed new entrants to the market who were "not seeking the type of hit and run activity we have experienced in this market to date."
However, VHI also said immediate clarification was required on the status of any existing BUPA business that is taken over by the Quinn Group. Our understanding is that this business has effectively come out of the risk equalisation exemption period since January 1st, 2006, and must therefore continue tocontribute to the community risk."
Conor Healy, ceo of the Cork Chamber of Commerce said the takeover was very good news for the workforce in Fermoy.