Getting the band back together is having a moment – even if reuniting original line-ups can be difficult.
Some, such as Oasis founding members Paul McGuigan and Tony McCarroll, haven’t been part of the group’s sell-out stadium tour this year, spanning from Dublin to São Paulo. Others, such as Shane MacGowan of The Pogues, former Linkin Park frontman Chester Bennington and Girls Aloud’s Sarah Harding, are sadly no longer with us.
Corporate life is no different. Recent years have seen Bob Iger return as chief executive to reboot Disney, Nike veteran Elliott Hill came back as chief executive (CEO) to help refocus the sportswear giant, and Novo Nordisk called up former CEO Mike Doustdar to lead a turnaround at the Danish drugmaker, this time as chairman. Yet in each case, they have had to get to know many of the other faces around the boardroom table.
Closer to home, however, it seems to have taken little persuasion for four executives involved in the establishment of two health insurance companies before – Vivas Health and GloHealth (both now part of Irish Life Health) – to come together to have another shot at stirring competition in the market.
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This time it is with Level Health, a joint venture with insurer Aviva Insurance Ireland, which celebrated its first anniversary this month.
“We may be the newest brand in the market, with a fresh and innovative approach, but we’ve actually got over 200 years of health insurance market experience between us,” says Jim Dowdall, chief executive of Level Health, of the reformed four-piece that includes chairman Oliver Tattan, chief financial officer Stephen Loughman and chief commercial officer Ruth Bailey.
[ Level Health files complaint in Brussels about subsidy scheme that helps Vhi mostOpens in new window ]
“Our view is that there is unfinished business in the health insurance market.”
The number of private health insurers is now double the two – VHI and Bupa Ireland – that were in the market when the veterans launched Vivas Health 21 years ago. Covered people have risen 20 per cent to 2.52 million, while industry premiums have almost quadrupled to €3.6 billion. Yet, some things, Dowdall notes, haven’t changed.
The most frustrating, he says, is the ongoing subsidy model for older and higher-risk citizens with health coverage – of which State-owned VHI, which still has a grip on almost half of the market, remains the main beneficiary.
Under the risk equalisation scheme (RES), in existence in Ireland for decades and in its current form since 2013, health insurers whose customers have a higher risk profile than the market average, obtain payments from a risk equalisation fund. This is part of the Irish “community rating” health insurance system, where everyone pays the same premium for a given policy, regardless of age or health.
“We’re not against risk equalisation,” says Dowdall. “There’s a need for it in the market. But the nature of it is completely flawed.”
The main problem is the fixed rate levies that apply to policies, which, he argues, penalises younger people, in particular, looking to take out health insurance.
Our intention is that we’ll be at over €100 million in premium in the next two years and that we’ll reach €350 million in premium three years after that
— Jim Dowdall
The stamp duty levy on the vast majority of adult policies stands at €469, and is set to rise to €517 next April.
“Younger people, who typically opt for lower levels of cover, might pay €900 or €1,000 for a health insurance plan. But about 50 per cent of that is levy-related,” says Dowdall.
By contrast, the levy accounts for about 25 per cent of the €1,830 average premium in the market and under 5 per cent of the most expensive, bells-and-whistles plan, which costs about €10,150 a year.
“We should be encouraging more young people to take out health insurance,” he says. “That would reduce the cost of providing coverage across the board.”
CV
Name: Jim Dowdall
Position: CEO of Level Health
Lives: Castleknock
Family: Married to Jeanne, has three adult children – Cian, Aoibhinn and Caomihe – and a two-month old grandchild, Scott
Hobbies: He has been an active long-distance runner all his life, having completed marathons, ultra marathons and ironman triathlons.
Something about Jim that might surprise: He developed his love for long-distance running when he ran the first two Dublin Marathons as a teenager in 1980 and 1981
Something that you might expect: “I believe the Government needs to do much more to support entrepreneurial risk-taking in Ireland.”
Level Health filed a detailed complaint last month to the European Commission on the operation of the scheme, with the Department of Health known to be eyeing a 10-year extension of the plan when the current scheme expires in 2027.
“VHI’s position is artificially augmented and strengthened by the RES, to the detriment of the few other businesses willing to compete in the Irish market,” Level Health said in a statement on the complaint. “Unlike other economic sectors which were liberalised [in the 1990s], health insurance has never delivered to the consumer the full benefits of competition because of the way in which the RES has been designed and operated.”
The complaint outlines a series of alleged breaches of European Union (EU) law, including abuse of dominance and the granting of special and exclusive rights, the granting of unlawful state aid, and infringement of the freedom to provide services. All would defy the Treaty on the Functioning of the European Union, the rule book for how the union operates.
Dowdall argues that there should be more than four players in the market. “There should be six or seven,” he says.
“But I would argue that the Health Insurance Authority and Department of Health are not concerned about this. And the three large incumbents in the market seem to be quite happy with their relative market shares, and are reliant on the fact that people don’t tend to switch providers a lot. That’s not in customers’ interests. They should be awake at night trying to work out how to fight for customers.”
The VHI has a 48.3 per cent share of the health insurance market, according to HIA data, while Laya is the second largest player, with a 28.1 per cent slice of activity. Irish Life Health is behind with 20.3 per cent of policies in Ireland.
Dowdall says that Level Health accounts for about 1 per cent of the market. The remaining 2 per cent or so is with restricted membership undertakings, which provide coverage to members of common occupational groups such as An Garda Síochána or ESB staff.
[ Numbers paying for private health insurance climb despite price hikesOpens in new window ]
“There’s no strategy in the department for private health care. People who take out health insurance are effectively using their money to alleviate the burden on the public system. Over half of cardiac procedures in the country are carried out by the private system – and about 65 per cent of spinal and orthopaedic surgeries,” he says.
“Every euro that is spent on private health is alleviating the burden on the public system. And does the State really recognise that? No, it doesn’t.”
Dowdall estimates that companies in Ireland are paying about €1 billion a year in health insurance premiums for employees. He argues that employees should not be paying benefit-in-kind tax on this. “They should be incentivised to alleviate the burden on the public health system,” he says. “Think about how achievable Sláintecare would be if we have a more vibrant private healthcare market.”
One of the aims of Sláintecare, launched in 2017, is to remove private care from public hospitals, to provide a single-tier public system.
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Dowdall says he is met with “a lot of silence” when he seeks to discuss the role of private healthcare with officials.
“Private healthcare is not a peripheral part of the health system. It’s a hugely important part of it,” he says. “The area of the Department of Health that is responsible for health insurance policy has no strategy for it – and how it can contribute even more to the overall health system.”
He says there are “huge conflicts of interest” with the same unit ultimately being responsible for the VHI and the new RES scheme.
“I have huge admiration for people working in the public system, but it isn’t sufficient to cater for the country’s needs,” he says.
That’s even though the Government’s allocated health budget will reach a record €27.4 billion next year – almost double the €14.6 billion spent in 2016, including overruns.
“The increase in the cost we’ve seen to the State over the past decade is not sustainable. But the challenge is that, with a growing and ageing population, demand is going to be even higher into the future,” he says. “People need to recognise the public system is not sufficient to cater for their health needs.”
Dowdall’s more than two decades in health insurance stems from his original career in technology.
The native of Glasnevin in north Dublin joined the IT department of Irish Life straight from secondary school in 1981. “It was very exciting at the time. You’re talking about a big mainframe of computers in a room. They probably had less memory than a smartwatch today,” he says.
Dowdall worked for US IT group Amdahl between 1996 and 2000. During this time he undertook a master’s in management practice with the Irish Management Institute, having previously studied finance and information systems at night with Trinity College Dublin.
He joined Marrakech, the Dublin online platform for firms to manage their buying and selling processes, in 2001. It was founded in 1998, counted businessman Denis O’Brien as a backer as it went on to raise tens of millions of euros of venture capital funding, and had ambitions of an initial public offering (IPO) – but never lived up to its promise.
[ Health insurance watchdog plans to increase levy by 10%Opens in new window ]
In many ways, it continued to embody the hubris of the dotcom era – even after the bubble burst. “I remember one of the first executive meetings I attended, the conversation was about sponsoring a Formula 1 team,” he recalls of the loss-making company at the time. The business ended up being taken over by UK tech group AMT-Sybex.
“I learned a lot from the experience – about needing to cut your cloth to the right size and focusing on building your revenue streams and managing your expenses,” he says.
In 2003, Dowdall was introduced to Tattan, a former CEO of both VHI and businessman Dermot Desmond’s Daon identity verification company, and Loughman, who had also served as a senior executive in both. The two were developing the idea of setting up Vivas with the backing of Desmond and AIB at the time. Dowdall would become their operations director.
When Vivas was taken over by Aviva (then known as Hibernian Insurance in the Irish market) in 2008, Dowdall became managing director of the business. He was subsequently promoted to become something of an accidental CEO of Aviva Ireland at the end of 2009 as the wider UK-based group was going through a lot of organisational changes.
“It was a job I had no ambition to have. I held it for about 15 months, but I realised during that time that my real love was working with start-ups,” he says.
Dowdall came together again with Tattan, Loughman and Bailey, a former marketing executive with Vivas and Aviva, in 2011 to set up health insurer GloHealth, in which Irish Life took a 49 per cent stake. It launched the following year. In 2016, Irish Life acquired the remainder of the business and the entirety of Vivas from Aviva, merged the two to create Irish Life Health – and put Dowdall in charge.
He stepped down in early 2021, but remained a part-time strategic adviser until April 2023 – around which time the four start-up pros were flirting with setting up another health insurer.
“While we brought more competition to the market with the other two business, we still hadn’t cracked it,” Dowdall says in his office in Tallaght, Dublin. “We believed there was an opportunity for more competition and to be more innovative and really deliver for customers.”
There were also a number of potential backers interested in the health market circling the market at the time: underbidders for Laya Healthcare, the second-largest player in Ireland, which traces its roots back to Bupa Ireland. The business was bought by Axa Ireland for €650 million.
But the decision to join forces with Aviva cropped up when Bailey got chatting with the CEO of the insurer’s Irish business, Declan O’Rourke, on the sidelines of an under-12’s hurling match in Naas, Co Kildare, where both had sons playing.
O’Rourke recalled the encounter to The Irish Times last year, saying: “Ruth told me that the team were looking at going again and I said, ‘Brilliant, we are looking at doing something in this area, too’. They’re the experts. We have the capital’.” Aviva Insurance Ireland underwrites the health coverage.
Level Health’s first 12 months in operation have seen it attract about 25,000 customers and generate more than €30 million in premiums.
“Our intention is that we’ll be at over €100 million in premium in the next two years and that we’ll reach €350 million in premium three years after that,” he says. “We’ve got big ambitions for the business.”
At some stage I won’t be involved as CEO of the business. I may well continue to work here on a part-time basis. But I don’t envisage myself doing anything after Level Health
— Jim Dowdall
Level Health started off with four different plans, and claims that its most popular plans are cheaper than the nearest comparable plans offered by the three other providers, who have a total of 350 different plans between them. While the company is in the process of introducing three further plans, he insists it will maintain a “small number of plans” to keep its offering simple.
“We provide access to more hospitals, more urgent care centres and more diagnostic centres than any other company in the health insurance market,” says Dowdall, adding that members of its plans can also access discounts off the likes of home and car insurance with Aviva.
He says that the company has no intention of following the likes of VHI and Laya in opening health centres. “Having a clinic in Dublin, Cork or Limerick is of no use to someone sick in Kerry. For us, the key is to build a huge network of partners for our customers.”
Dowdall says Level Health’s “market-leading” telemedicine service – providing 24/7 access to doctors, midwives, physiotherapists and mental health professionals – through its mobile app and WhatsApp is one of the company’s unique selling points. “It’s phenomenal. You can get access to a doctor within seconds. Over 1,000 people use it every month,” he says.
The executive says that while there is no formal agreement in place for Aviva to take over the entire business in time, “it may well happen at some stage – a lot further down the road”.
As for Dowdall, he sees this as his last executive gig – having recently turned 63.
“At some stage I won’t be involved as CEO of the business. I may well continue to work here on a part-time basis. But I don’t envisage myself doing anything after Level Health,” he says. “Right now, however, I am really energised. We are just getting started.”
