THE board of the VHI is expected to move quickly to appoint a new chief executive following the sudden resignation of Mr Brian Duncan last Friday.

Moves to appoint a new chief executive take place against the background of the imminent arrival in the Irish market of a competitor for the VHI in the provision of health insurance. The British company, BUPA, which has recruited some top personnel from VHI in recent months, is due to launch its products in the Irish market by the end of the year.

The VHI has been criticised for regular increases in premiums ahead of the rate of inflation.

The split between the VHI board and its chief executive of two years comes as the company needs to put policies in place to deal with new competition in the market. Attracting a suitable new chief executive will be made more difficult by the manner of Mr Duncan's departure which followed the departure two years earlier of the former chief executive, Mr Tom Ryan.

A statement from the VHI on Friday night announcing Mr Duncan's resignation said the chief executive had concluded "that the events of recent months have impaired his ability to serve the interests of the VHI, its members and its employees".

The statement referred to the board meeting of Thursday last at which the directors considered a report from a subcommittee on the management of the company and strategic issues.

Compiled by four directors, the report was critical of Mr Duncan and called for the termination of his contract. Mr Duncan considered the report to have been "Unfair and imbalanced and prejudicial to his professional and business standing", according to the statement.

While Mr Duncan's resignation officially comes into effect on October 18th he is not expected to play any further role in the management of the company. The report is understood to have concluded that the management of the VHI was divided, morale in the company was low and that achieving the changes needed to meet competition was increasingly difficult.

The issues examined by the subcommittee included the handling of disputes with the private hospitals; the disagreement between Mr Duncan and chairman Mr Noel Hanlon about the role of a senior executive in the organisation; and other areas of tension between the board, the management and its chairman. The subcommittee recommended that Mr Hanlon remain as chairman. His term of office as chairman ends in February 1997.

The disagreement about four months ago on the position of a senior executive with responsibility for product development led to a complete breakdown in direct communications between Mr Duncan and Mr Hanlon.

It is understood that there was little boardroom support for Mr Duncan, who is not a member of a board which was expanded to 12 members in May with the appointment of seven new directors.

Sources have indicated that Mr Duncan will receive £150,000-£200,000 compensation for the early termination of his five year contract.