BIG BUSINESS FROM THE GET GO

Oliver Tattan

Ireland rates very badly when it comes to competition in the health insurance sector. it was this factor that prompted Oliver Tattan to set up Vivas Health. He tells Niamh MacSweeney why he is intent on initiating change in the industry and how he is empowering people to take control of their health.

Approximately 2.2 million people in the Republic of Ireland have health insurance according to the Health Insurance Authority (HIA), 1.5 million of which are members of the VHI. The fact that there aren’t enough players in the health insurance sector was a deciding factor for Oliver Tattan when he set up Vivas Health in 2004, but he was also driven by the desire to change the way health insurance was being done in this country and to facilitate people to take control of their own health rather than allowing an insurer dictate to them.

According to Tattan traditional health insurers generally just paid the bills, but he insists that Vivas Health differs in that they encourage members to take a more proactive approach to their health. “Our philosophy is completely different and is based on more choice and better education. Its all about taking control by keeping yourself well and if you do get ill, its about how best to manage yourself through that process,” the entrepreneur explains.

STARTING OUT BIG

Financing the start-up of any new business can be difficult, but in the case of an insurance company a large amount of money needs to be raised due to the solvency requirements imposed on such businesses. Fortunately for Vivas Health support from Dermot Desmond eased the financial burden. But according to Tattan it was not necessarily the raising of capital that posed the greatest challenge, rather the time spent finding the right team of people to run the company. “In an entrepreneurial or start-up company it is an unforgiving space and if you recruit the wrong people it can be detrimental,” Tattan says.

As a full service insurance company, that is fully licensed and regulated by the Financial Regulator, Tattan spent a great deal of time and effort recruiting people to fill the various positions in marketing, sales, IT, legal and regulatory divisions. With so many functions within this emerging business it was crucial that Tattan and his team combine their skills and start out big in the market from the very beginning. “We have an excellent team and they are the people who really built the business. Entrepreneurial companies attract a certain type of person and we tried to sell that vision. Everybody who joined us are entrepreneurs in their own right,” Tattan confesses.

Taking on big players

Attracting customers and obtaining their trust and respect was another challenge that Tattan had to overcome but the determined entrepreneur was not deterred. “We had a huge challenge at the beginning dealing with the biggest insurer in Ireland; VHI and the biggest insurer in the UK; BUPA, so we actually took on the biggest players and that was a huge goal that we set ourselves,” Tattan reveals. He believes the secret to the success of Vivas can be attributed to the fact that consumers wanted an alternative to the one size fits all model that they were being offered. Tattan agrees it can be difficult to attract new consumers because health insurance isn’t always on the top of peoples list of things to do. However, he thinks this attitude is changing as increasingly people are becoming more proactive when deciding on the insurer that can best meet their needs. “Part of that means getting a quote every year, this practice is more established in motor insurance where most people shop around. Although that hasn’t established itself as much in the health insurance space, it is becoming more and more prevalent,” he says.

COMPETITION IN THE MARKET

Competition is healthy in any market especially so in the health insurance market, which lacks sufficient competition in Ireland. When BUPA decided to leave the Irish market it paved the way for the VHI to monopolise and although competitors such as Vivas and Quinn now hold strong positions in the health insurance sector, Tattan argues there is still a long way to go before the industry can attract a greater level of competitiveness. According to Tattan, “competition in every sector of our economy is proven to benefit because it brings innovation, it brings price competition, it brings new products and it results in the segmentation of the market so that people get plans and products that are suited to their own needs.”

Greater Choice for consumers

He maintains that a State run service gives products whereby a one size fits all approach is taken, but says that people have very different needs and requirements and if a more open market was present, consumers would naturally have more choices available to them. While Vivas Health and Quinn Insurance are bringing more competition into the market, the regulatory issue is still unresolved. “Until that is sorted and a fair form of risk equalisation is implemented and until the VHI are regulated so that they have to play by the same rules, we are not going to get the players entering the market that you would expect to get,” Tattan says.

He points to a number of leading international insurers such as Friends First, AXA and Aliance, but says none of these will touch the Irish market. “These companies have established brands, established customers with excellent reputations, but they won’t enter the health insurance market in Ireland until there is a commitment from the Government that they are actually welcome in the market and that there is going to be regulatory reform,” Tattan comments. He maintains this is the main reason why it is entrepreneurial companies who are entering the space and points to BUPA being forced out of the market as a perfect example of an unfair regulatory policy, which he says doesn’t bode well for any other big players thinking of entering the market. “I think it is an indictment on the Government that a foreign investor, which is what BUPA were, should be forced to leave the market because of a regulatory regime and it is scandalous the way Government has handled the sector,” Tattan says.

CALL FOR REFORM

Tattan is adamant that the time has come for the Government to reform the health insurance sector as a matter of urgency. A Goodbody report published earlier in the year, on behalf of Vivas Health, made a number of recommendations as to how these reforms could be implemented. The report calls for urgent action to address the need for competition in the market and calls on the suspension of risk equalisation while VHI remains dominant and has regulatory advantages. “If we really want to do consumers a service and see more competition we are going to have to get these reforms implemented fast. We have made recommendations to the Government on what a fair form of risk equalisation would look like and are keen to work with the Government to find a solution so that consumers will benefit,” Tattan concludes.

Published in the July/August 2007 Issue of Irish Entrepreneur