The announcement by the Quinn Group last night that it is to proceed with its takeover of Bupa Ireland secures both the jobs of 300 staff in Fermoy and also health insurance cover for about 475,000 people.
The new Quinn/Bupa operation will now introduce a one-year price-freeze for subscribers from the beginning of March.
The Quinn Group had announced several weeks ago it was taking over Bupa Ireland, following the latter's decision to withdraw from the Irish market.
However, there was uncertainty about the deal after the Government rushed emergency legislation through the Oireachtas on Wednesday to close a legal loophole which would have allowed the Quinn Group to avoid paying tens of millions of euro in risk-equalisation payments. The Quinn Group had argued that, as a new entrant to the market, it should qualify for a three-year exemption from risk-equalisation payments allowed under legislation.
However, all previous new entrants had been start-up operations and this issue had never been legally tested previously.
The Government on Wednesday accepted there was indeed a loophole and dropped the three-year exemption.
In a personal statement last night, chairman of the Quinn Group Seán Quinn strongly criticised the Government over the introduction of the legislation.However, he said he intended to honour a commitment given to Bupa staff last Friday that the new operation would remain in Fermoy. He also signalled the new company would compete strongly with VHI on price.
Mr Quinn said VHI subscribers were paying too much for their health insurance cover and encouraged them to transfer to his company. He said the Quinn Group had reduced the price of general insurance in Ireland by 45 per cent over the last five years.
Bupa has maintained the new price-freeze will mean that, for the average family, its mid-range "Essential Plus" product will be 27 per cent cheaper than the comparable VHI scheme.
VHI told its 1.5 million subscribers yesterday the introduction of risk-equalisation payments, facilitated by the emergency legislation, would not lead to price reductions but would curb the rate of increases which would have been the case.
VHI prices have risen by 25 per cent over the last two years and the company is likely to seek a further rate-hike in the summer.
Following the closure of the legal loophole, the VHI will look forward to receiving millions in risk-equalisation payments from Quinn, as it has a much older subscriber base.
However, a challenge by Bupa to the legality of risk equalisation is before the Supreme Court and payments due for 2006 are held up by a court stay.
Quinn signalled yesterday it would fight against risk equalisation and the Government's emergency legislation "through the necessary and appropriate channels".
