A new report recommends that the risk equalisation scheme in the private health insurance sector should be suspended while VHI enjoys market dominance and does not have to operate under the same regulations as its competitors.

The recommendation is one of a number of "urgent " reforms to the sector set out in a new report by Goodbody Economic Consultants, which was commissioned by Vivas Health. The document was submitted by Vivas to the Barrington Group, which is currently reviewing the market.

The report says the market is extremely uncompetitive, primarily as a result of VHI dominance.

It says that even if the risk equalisation scheme is implemented, the payments should be scaled back. It proposes that a global measure of market concentration, the Herfindahl-Hirschman index, should be adopted to scale back payments calculated under the scheme.

The report recommends the expansion of the Health Insurance Authority's role. It says that at present the main priority of the authority is "to protect the incumbent, VHI, from new entrants". It says it should have an explicit mandate to foster competition and to guard against "predatory behaviour" by VHI and against price discrimination and other exclusionary behaviour.

The report also says that, due to its lengthy period as a monopoly, VHI has details on many of its competitors' policyholders. This imbalance could be corrected by giving competitors access to VHI's customers.

The report calls for a review of the rationale for triggering risk equalisation, which does not take account of VHI's advantages.

It says VHI's exemption from having the same level of reserves as its competitors represents an advantage of about €148 million. It also says VHI has an advantage because of its not-for-profit status.