Newcomer Irish Life Health shaking up the insurance market

The smell of new furniture and freshly painted walls filled the air late last month at the offices of the newly-created Irish Life Health as staff began to get their bearings.

It was officially day one of the new health insurer, which is an amalgam of Aviva Health and GloHealth under the ownership of Irish Life. Oversized balloons in the lobby celebrated the new venture while various pieces of art and branding sat on the floor, waiting to be hung on the walls.

“This is the first business card I’ve ever given out in Irish Life Health,” says Jim Dowdall as we swap credentials in the company’s meeting room, which offers views of State-owned rival VHI’s office across the road.

It’s an interesting location for the new company. “They can see where all their customers are going,” Dowdall says with a chuckle.

It’s a case of back to the future for Dowdall, whose first job on leaving school was in the fledgling IT department of Irish Life. He stayed for 15 years, with “probably two of the most significant parts” of his career since then being stints with Aviva (previously Vivas Health, where he was a founder and shareholder) and GloHealth.

“Now the three businesses are coming back together for me and it’s just fantastic,” he says .

Irish Life Health combines 160 staff, about 425,000 policyholders (roughly 300,000 from the Aviva side and 125,000 from GloHealth) and premium income of just under €500 million.

It is the number three player in the market with a 21 per cent share of customers. VHI has roughly half of the market while Laya Healthcare, which is owned by American insurance giant AIG, is the number two.

“It’s a coming together of the two strongest, most innovative health insurers in the market,” Dowdall boasts.

Coming together

“Something like this has never happened before in the health insurance market in Ireland. Plus the fact that it’s coming together with Irish Life group, which has been established for 75 years and already looks after 1 million customers, and understands the needs of Irish people.”

VHI and Laya might dispute the claims about Aviva and GloHealth being the most innovative players in health insurance here? “They might but they wouldn’t really be able to stand over it. If you look at all the firsts that have happened in this market . . . I can give you three.

“The first is being able to provide cover to customers that is relevant to their own particular needs. That was never done before, it was always one-size-fits-all health insurance.

“Along with that, providing customers with the opportunity to be able to claim as they went along and not have to keep their receipts till the end of the year before they submitted them. That’s convenience.

“The other element we introduced was a back-up service. We all suffer at different stages from neck and back strains and our customers in Irish Life Health now have access to specialised physios, who can intervene and address whatever that niggling injury is before it develops into something more. Our philosophy is about helping our customers stay well as well as giving them the cover they need to get well when they’re ill.

“We also provide our customers with access to [free] online GPs through a video consultation or through a phone call. They’re the innovations that Irish Life Health’s combined businesses have brought to the market.”

Dowdall says the innovations won’t stop there. Irish Life has “big ambitions” for the new business, which it hopes will complement its existing and highly successful life and pensions activities.

“Irish Life is not entering the health market to stay still,” he says. “We’ve got scale in our business and we’ve got the support of a parent in Irish Life that views this opportunity strategically.”

Different cultures

Marrying different cultures is always a challenge as is fusing together the separate teams into a cohesive operating unit. But Dowdall says Aviva Health and GloHealth “share the same DNA”.

“They are entrepreneurial businesses at the core, they were start-up businesses that developed into something that was very successful. This is going to be a fantastic journey as we bring them together rather than a difficult journey.”

There is also the small matter of how to streamline the 80 or so different policies that they offered to customers between them.

“Our intention would be to consolidate those down,” Dowdall says, without giving any clues as to what this might mean for customers in terms of pricing save for “delivering the best value”.

“It’s important for us to tell customers that it’s business as usual. The same quality benefits that they’ve had, the same way of claiming, that all continues today. Nothing changes other than the name. Our intention is to consolidate our products by coming up with new innovations and product offerings in the months and years ahead.”

Dowdall and Stephen Loughman were the main founders of GloHealth, having also been part of the start-up team in Vivas Health, which entered the market in 2004, before being sold four years later to Hibernian, which itself was acquired by Aviva in 2009.

After being a business owner and entrepreneur for most of the past decade, Dowdall is once again an employee, albeit a senior executive reporting to the board of Irish Life.

“It doesn’t matter what role I’ve had, I’ve always been part of a team,” he says. “Being an employee of Irish Life now is a badge of honour. The fact that I’ve the opportunity to be part of a very significant health insurance business now with that level of support is just the pinnacle of what I’ve done so far.”

Such is Dowdall’s air of positivity and the happy-clappy messaging behind the launch of Irish Life Health, you’d almost overlook the many challenges facing the business.

Our ageing population is pushing up claims costs, with VHI this week forecasting that this will rise by about 80 per cent to €3.4 billion by 2025.

“That’s one of the main drivers of cost,” he explains. “The second is government policy. The accelerated health insurance premium over recent years has been down to levies and down to charges for public beds in public hospitals.”

Dowdall says the company will “take a lead” in challenging policy at Government level to “find ways to fix that”.

Preferential treatment

In 2014, the Government introduced charges for public hospitals so that if two people enter the same hospital on the same day with the same illness, the person with no health insurance is asked to pay the statutory charge of €75 a night while the one with health insurance will be charged more than €800.

“If they get preferential treatment, it should be charged for, if they don’t and they end up on the trolley, or a chair, or a recliner they are now being charged €813 a night because they elected that if a private bed becomes available they’d like to take it.

“Everybody has a universal entitlement to the public system where you pay through your taxes so it’s not right that those people are heavily penalised. It’s wrong.”

How should it be changed?

“We should immediately revert back to were there were 20 per cent of beds assigned to semi-private or private patients. It is right that a health insurer pays the charges if one of our customers uses those facilities. I don’t think it’s right that when somebody has already paid through their taxes and they’re not getting any preferential treatment that they are being double taxed.”

Dowdall is also exercised by the health insurance levy, which operates on a flat rate. “If we take a customer who is paying €600 for their health insurance premium, €404 of that is health insurance levy. Let’s say someone pays €6,000, €404 of that is the health insurance levy.

“It’s not equitable. If we changed it to a percentage [of a premium] it would raise exactly the same amount of money but health insurance at the lower level would become more affordable and we’d attract more people into the market. If you attract more people into a community rated market, overall health insurance becomes more sustainable.”

Dowdall is also unhappy with the situation whereby the Department of Health sets policy and imposes hospital charges, while the Minister is the regulator, and the biggest player in the health insurance market is State-owned VHI.

“It doesn’t make sense. I don’t believe the State should be in the health insurance market. They should be involved in regulating it and setting policy for the overall health system. These conflicts should be addressed.”

Dowdall hasn't met Minister for Health Simon Harris but hopes to do so in the "coming weeks" to raise some of these issues.

With Irish Life claiming that it does business with nine out of 10 indigenous companies and seven out of 10 multinationals, the corporate market could prove fertile ground for the new business.

“About 25 per cent of the overall market links to corporate business. Already, we would outperform our competitors in terms of our share of this segment and we intend to grow that. We have already acquired some new corporates to join the hundreds that we already have.”

Dowdall is something of a fitness fanatic. “I love running but as my body is getting older I decided a couple of years ago to try and run longer. I’ve done a couple of ultramarathons. It’s bucket list stuff at my age.”

He competed last month in the Dublin Ironman 70.3 (a combination of a half marathon run, swimming and cycling) in spite of not being able to swim. Dowdall finished 892nd out of 1,908 athletes.

“At 53, learning to swim ticked a box for me,” he says. He took lessons in the National Aquatic Centre but also practised while on holiday with the family.

“My children used to walk away from me because it was a little embarrassing.”

Dowdall grew up in Glasnevin, north Dublin. His father was an usher in Leinster House while his mother was a housewife.

“My work ethic came from them. My parents worked hard so their four children had opportunities. I’m very driven. My experience is that the harder I work, the more successful I can be.

Leaving school

He joined the IT department in Irish Life on leaving school in 1981. “IT was becoming very popular at that stage so I was blessed to get the job. It was all about running mainframes the size of a garage.

“The largest that we bought had 4MB memory. The smallest mobile phone now would have more than that. We used to shut down on a Thursday for maintenance. Imagine doing that now?”

Dowdall completed a degree and a masters by night, setting himself up for his later management career.

He moved to tech company Amdahl in 1996 and after a year was made European head of IT around the time that everyone was worrying about Y2K . “Some of the scare stories [about Y2K] were way removed from the reality,” he says.

The Dubliner got an opportunity to move to California with Amdahl but turned it down for family reasons.

In 2001, he joined the dotcom start-up Marrakech to become its vice president of operations. “The very first management meeting I went to there, the discussion was about sponsoring a Formula One team. This was a company that had no revenue, no customers and a great idea. It was very strange.”

In 2003, he linked up with Loughman and Oliver Tattan to create Vivas Health. He later became managing director of Aviva Health, leaving in 2011 to set up GloHealth, again with Loughman and Tattan.

“People thought we were mad. There was a deep recession but our own view was that if we truly did something that was better for customers there was no better time to launch the business.”

It launched in mid-2012. "On our very first day in business, Facebook [and some 600 staff] switched to GloHealth. They were our first customer. They're still a customer today."

GloHealth never made a profit – that was due to happen this year. Dowdall won’t talk about his shareholdings in either business or how much money he has made from the sale of both Vivas and GloHealth.

“It’s fair to say that we’ve a comfortable lifestyle. We don’t have any debt. But this is not about money. You get out of bed every morning because this is something you love doing and we have an opportunity to make a difference,” he says.

Irish Life plans to spend €16 million over an 18-month period to achieve synergies of the same amount within the combined businesses, which he says will be profitable this year.

Where does he want Irish Life Health to be in five years’ time? “I have no doubt we will be number two in terms of market size in five years’ time.

“If there are three players in the market then we would expect to have at least a 30-odd per cent market share. We would have very strong ambition to do that. That’ll take time but the opportunity is there.”

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CV

Name: Jim Dowdall

Job: Managing director of Irish Life Health

Age: 54 next week

Lives: Navan Road, Dublin

Family: Married to Jeanne with three children

Hobbies: Running and endurance activities

Something we might expect: “I’m fully insured by Irish Life Health.”

Something that might surprise: He has run several marathons, his best time being two hours 36 minutes in 1981 in Dublin, putting him in the top 100. “I was young then. I couldn’t do that anymore.”