Cornhill Insurance and BUPA have struck a deal to offer Cornhill's private medical insurance policyholders a transfer to BUPA when their policies run out.
The move represents a U-turn from Cornhill because it had originally stated the book would run out. The insurer advised brokers to renew their business wherever they could obtain the best deals.
Cornhill's book of business is believed to be worth £10m-£12m in written premium.
Rival health provider Philip Fowles, marketing director of BCWA, said BUPA could lose much of the business at renewal.
"I have spoken to a number of brokers who have said they will be reviewing the book at renewal. BUPA could have bought a dead duck."
Another health provider spokesman added: "We were amazed that Cornhill started by saying they would run the book out and then offered it on the market. A lot of brokers have already started offering their business elsewhere. It's a bit like shutting the stable door after the horse has bolted."
However, Cornhill has dismissed the speculation that the way the book was transferred was strategically flawed.
A company spokesman said: "Our first priority was to pull out of the private healthcare market. We have always had an open mind on the subject. We had no pre-conceived agenda. We simply wanted to pull out causing a minimum of disruption.
"When we decided to withdraw, our strategy was to let partners and customers know as soon as possible. What has transpired is that a number of companies have come forward. Of those, BUPA offered the best arrangement in terms of customers and brokers."
Under the new deal, Cornhill will guarantee continued cover for all existing Healthcare and Healthsave customers until expiry of their existing policy. Cornhill's customers will then be invited to renew their medical insurance with BUPA on a no-further-underwriting basis.
Intermediaries making the switch will be offered BUPA's standard agency terms.