Major disruption to Ireland’s
private health insurance market has been averted by the Financial
Regulator’s decision to allow Irish general insurer Quinn Insurance
Limited’s (QIL) health insurance unit Quinn Healthcare to trade as
normal. The regulator’s move followed the High Court in Dublin’s
decision on 30 March to place QIL under administration.
Launched in April 2007, Quinn
Healthcare has made big inroads into Ireland’s health insurance
market and in April 2009 announced that it had passed the 500,000
policyholder mark. Indicative of this figure’s significance,
Ireland’s total population is 4.45m.
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According to QIL’s parent company,
Irish conglomerate Quinn Group, QIL’s assets exceed its liabilities
of €230m ($310m) and meet European Union requirements but not the
Financial Regulator’s requirement. The shortfall, based on the
Financial Regulator’s requirement, resulted from property
write-downs and investment losses over the past two years totaling
€220m.
QIL has also been prevented by the
Financial Regulator from writing new general insurance business in
the UK. However, the High Court’s action does not apply to Quinn
Group’s Quinn Life business in Ireland which is a separate
entity.
To restore QIL’s solvency position
to the Financial Regulator 150% requirement, Quinn Group estimates
that a cash injection of between €100m and €150m is required.
According to a statement by Quinn Group issued on 9 April, it has
cash reserves of €70m.
Indicating that all or part of its
insurance businesses could find their way onto the selling-block,
Quinn Group said it is “pursuing all options in order to resolve
the QIL situation”. The primary objective, stressed Quinn Group, is
to protect the wider group and deal with its debt.
QIL’s fate will be closely watched
by Aviva, the other major private player in Ireland’s health
insurance market where the largest insurer, state-controlled VHI
Healthcare is also under significant pressure.
VHI, lost some 120,000 customers in 2009 and incurred an €80m
underwriting loss. Between 2001 and 2009 VHI’s market share fell
from 83% in 2001 to 64% in 2009.
