IRISH REGULATORS QUESTION PRODUCT'S LEGALITY

DUBLIN, Ireland-A recently launched health insurer is in danger of losing its license to do business unless it changes some of its products.

Fermoy, Ireland-based BUPA Ireland, a wholly owned subsidiary of U.K. health insurer British United Provident Assn., is facing questions from regulators as to whether two of its insurance products contravene Irish law.

Ireland's Department of Health has questioned whether BUPA Ireland's products fall outside the Health Insurance Act 1994, particularly the required use of "community rating" on health care products. Community rating means that everyone pays the same premium for their coverage, irrespective of age, state of health or previous claims history.

"This principle must, in the common good, be maintained through whatever means are necessary, and I am fully committed to this principle," said Irish Health Minister Michael Noonan.

A BUPA spokesman said the organization was confident that its products complied with community rating. The dispute, he said, centered on the linking of two products, the Essential Hospital Plan, which is community-rated, and a cash plan, which is not. BUPA offers the products on both an individual and group basis. Although the current BUPA Ireland marketing literature contains the two products in the same brochure, they are not linked and therefore do not break the Health Insurance Act, according to the spokesman.

"The Department of Health is concerned about the perceived link between the Essential plan and the cash plan," he explained.

The cash plan is exempt from community rating because it pays out cash-for any purpose-based on the number of days a patient stays in a hospital, rather than specifically covering medical care.

"I want to see BUPA develop its business here but, as regulator, I do have a problem with the package they have launched," said Mr. Noonan.

"It appears that they are seeking to sell as an integrated package an indemnity product which is community-rated and a cash plan which is age-rated. Despite intensive discussions in recent weeks, it has not been possible so far to resolve the difficulties."

BUPA Ireland, formed in summer 1996, has signed up several thousand policyholders since its products were officially launched Jan. 1 and is continuing to accept new policyholders while the discussions are in progress. If the minister of health decides to deregister BUPA Ireland, it will have 21 days to appeal the decision, which could ultimately reach the Irish High Court.

Sean Cullen, a higher executive officer at the Department of Enterprise and Employment, which authorizes insurance companies, said the DEE is keeping an eye on the situation.

BUPA Ireland is supervised by the U.K. Department of Trade and Industry under the cross-border trading provisions of the European Union's Third Life and Non-Life Insurance Directives.