Consolidation among Slovak health insurers

HEALTH insurance companies operating in Slovakia will continue to consolidate. After the merger of the two state health insurance companies announced by Health Minister Richard Rasi in July, two private health insurance companies, Apollo and Dôvera, say they will come together too. These mergers will leave Slovakia’s health insurance market with just three insurers: one state and two private.

HEALTH insurance companies operating in Slovakia will continue to consolidate. After the merger of the two state health insurance companies announced by Health Minister Richard Rasi in July, two private health insurance companies, Apollo and Dôvera, say they will come together too. These mergers will leave Slovakia’s health insurance market with just three insurers: one state and two private.

The Penta financial group, with controlling interest in the two largest private health insurers operating in Slovakia, Dôvera and Apollo, announced a plan in mid-August to join them together, with the intention to create an insurer able to compete head to head with the state health insurer. The new consolidated private insurer should start operating in the beginning of 2010.

“Dôvera and Apollo will fuse into one insurer with 1.5 million clients,” Jaroslav Haščák, a partner of Penta told the Pravda daily, which also cited him as adding that in “this way the insurers will save operating costs and make their operations more effective.“

Representative of both private insurers refused to elaborate on details of the transaction until it is finished. Apollo’s general director, Albert Šmajda, said that his company does not want this merger to negatively affect policyholders or health-care providers. On the contrary, he promised that policyholders can expect and will welcome better services, with a higher number of contracted locations and health-care providers.

Penta needs approvals from both Slovakia’s Antitrust Office (PMÚ) and its Health Care Supervisory Office (ÚDZS) for the merger. Haščák believes that Penta will obtain the approval as the two other state health insurers are already scheduled to merge with Slovakia’s biggest insurer, Všeobecná Zdravotná Poisťovňa, joining with another smaller state insurer, Spoločná Zdravotná Poisťovňa.

ÚDZS and PMÚ expect to receive an application for merger of the private health insurers by the end of August.

Penta, a private equity company, controls 100 percent of Dôvera and 49 percent of Apollo via its Dutch affiliate Hicee, the Trend weekly wrote. Earlier in August, ÚDZS green lighted the sale of a 51percent stake in Apollo from Agel company to a Cyprus-based company named Prefto Holdings Limited, reportedly close to Penta.

At the beginning of 2009, Dôvera reported about 860,000 policyholders and Apollo had about 500,000 clients.

The Health Policy Institute (HPI) think-tank considers consolidation in the health insurance industry to be a natural reaction to the economic crisis. On the other hand, it warns that a reduction in the number of entities operating in the health insurance market will restrict choices available for citizens of Slovakia.

“A merger of the two private health insurers, Apollo and Dôvera, will create a financially robust health insurance company with space to save operating costs, for more effective purchase of health-care services and higher added value for clients,” writes HPI in a position paper published on its website.

HPI does not foresee any practical problems for clients. “It will be a technical operation and Penta already has experience with merging Dôvera with Sideria,” the think-tank added.

Peter Goliáš, an analyst with the Institute for Economic and Social Reforms (INEKO) think-tank, said that concentration in the health insurance market may hamper competition in the future. He pointed to this risk in relation to the merger of the two private, as well as the two state health insurance companies.

Goliáš thinks that the state should create conditions that support competition in the health insurance market to prevent a situation in which only one or two health insurance companies remain, as he said soon there may be only three rather than five insurers.

The Slovak cabinet green lighted the merger plan for Všeobecná Zdravotná Poisťovňa and Spoločná Zdravotná Poisťovňa in mid-July. Health Minister Raši has asked for time until the end of September to prepare the organisational, legislative, financial and other conditions for the merger. After the merger, the state insurer will have about 3.65 million policyholders.

Currently there are five health insurance companies operating in Slovakia. Other than the four insurers planning to merge, the fifth – Union – has just over 360,000 policyholders. Last May, Európska Zdravotná Poisťovňa, unsatisfied with conditions for doing business in the Slovak health-care sector, left the Slovak market and Spoločná Zdravotná Poisťovňa took over its policyholders.


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