The Court of First Instance (CFI) has upheld the Commission’s decision to reject BUPA’s Complaint that the Irish authorities’ risk equalisation system (RES) constitutes illegal state aid to the private medical insurance sector. Up until 1997, the Voluntary Health Insurance Board (VHI) had a monopoly over the Irish private medical insurance market. Following liberalisation, BUPA is now the VHI’s main competitor. The RES operated by the Health Insurance Authority (HIA) levies a payment on private medical insurance (PMI) companies whose risk profile is below the market average; and transfers funds to those PMI companies whose risk profile is above the average. The VHI’s longer presence in the market means that it has a larger proportion of older customers than BUPA. Consequently, its risk profile is above the market average, while BUPA’s is below. This effectively results in a transferring of funds through the HIA from BUPA to the VHI. The CFI upheld the Commission’s decision that the RES payments are lawful as they compensate PMI companies for the obligations associated with service in the general economic interest of all persons living in Ireland. PMI companies are required by legislation to cover any person requesting insurance and the RES payments ensure that all persons receive a minimum level of insurance at the same price regardless of age, sex or state of their health.
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CFI rejects BUPA’s complaint of Ireland’s risk equalisation system
- Nabarro LLP
- Cyrus Mehta, Rachel Bickler
- European Union, Ireland
- February 27 2008
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