More BUPA

Responding to my email on Pat Kenny's radio programme today, BUPA MD Martin O’Rourke claimed that the average age of BUPA subscribers is 38 v. 44 for VHI, which doesn’t sound like a major gap. However, when you set this out in an age band table, you can see very quickly what it might actually mean in terms of premium income v. potential claims.

I don’t know the actual age profiles, for either company, but today’s Irish Times states that over one-thirds of VHI subscribers are over 50. In the table below I’ve assumed that 36% of VHI subscribers are 50+.

The following table is illustrative only - but it clearly shows a dramatically different risk profile even with an average age gap of only 6 years.

Age Bands
VHI Base
20-30 (ave 25) 22%
30-40 (ave 35) 21%
40-50 (ave 45) 21%
50-60 (ave 55) 20%
60-70 (ave 65) 11%
70+ (ave 75) 5%

BUPA Base
20-30 (ave 25) 31%
30-40 (ave 35) 27%
40-50 (ave 45) 26%
50-60 (ave 55) 12%
60-70 (ave 65) 3%
70+ (ave 75) 1%

Average Subscriber Age from tables above
VHI - 44.2
BUPA - 38.2

BUPA Ireland Financial Performance

Mr O’Rourke also implied that the company was unprofitable until very recently. BUPA’s website shows reported operating profits of

Year BUPA Operating Profit
2004 €24.3m
2005 €19.7m

In a submission to The Health Insurance Authority dated 26th March 2004, VHI quote underwriting profit figures for BUPA as

Year BUPA Underwriting Profit
2000 €7.5m
2001 €13.8m
2002 €15.3m

I rarely agree with Bertie Ahern, but I think BUPA have taken us for mugs with their “beal bocht ”. BUPA need to be pressed very hard to disclose actual numbers!