On the adjournment of this debate I had begun my introduction of this Bill which has a specific purpose to deal with a specific problem brought to my attention by the Voluntary Health Insurance. This legislation is required for it to remain competitive in a particular area of the private health insurance market. This cannot be resolved by way of regulation but, on the advice of the Attorney General, requires an amendment to the parent Act.
Up until now VHI members who have spent time living abroad as part of their job have relied either upon the public health system in the foreign country or have arranged private health care insurance overseas — something that may prove awkward or inconvenient to arrange. Market research by VHI identified a demand among its members for a health insurance product that will provide those who reside temporarily outside the State with comprehensive cover for their health care costs. The Bill enables the VHI to meet that demand by acting as agent for the sale of an international health care plan.
This short Bill is essentially concerned with enabling the board to offer an additional product to its members, which takes account of expressed customer need. Arrangements to be put in place by VHI on foot of the proposed legislation puts an additional service at the disposal of members in order to form a seamless continuation of their VHI membership on their return from residing temporarily abroad.
Section 1 provides for the VHI board to have the power to act as an agent for an insurer in the sale of an international health care plan. The section provides that the board will simply require my consent to exercise its power to act as agent in the terms specified in the Bill. The section contains a definition empowering the VHI to hold an appointment as agent for an insurer.
Section 1 also sets a certain reasonable limitation on the type of undertaking in respect of which the VHI may act as agent. It defines an "insurer" as the holder of an authorisation within the meaning of the European Communities (Non-Life Insurance) Framework Regulations, 1994. This means the insurer concerned will have been duly notified to our central competent authority for insurance business, having already satisfied the competent insurance authority in the member state of establishment of its capacity to conduct the class of insurance business concerned.
Section 1 defines an international health care plan in terms of providing for the making of payments in relation to costs incurred in the provision of medical, surgical or related services. It further defines such a plan as being applicable to persons who will reside outside the State for such periods as the board may specify therein. Section 2 provides that the board, for the purposes of the powers granted under the Bill, will be subject to Part IV of the Insurance Act, 1989.
The VHI Act, 1957, provided that the board was not to be subject to the provisions of the Insurance Acts. However, as the Bill proposes to assign to the board the power to act as agent for an insurer, it was considered, and is provided for under section 2, that it must comply with the provisions of Part IV of the Insurance Act, 1989, which provides for the regulation of insurance intermediaries. The board has advised that it does not envisage any difficulty in complying with this provision. Sections 3 and 4 contain standard provisions relating to expenses and citation, respectively.
The purpose of the Bill is to enable the Voluntary Health Insurance Board to act as agent in the making available of health insurance to persons who will be resident outside the State for temporary periods. It is necessary to amend the Voluntary Health Insurance Acts, 1957 and 1996, in order to empower the board to act as agent to make available an international health care plan. The VHI board made strong representations that it must be able to offer an international health care plan to corporate and individual clients as soon as possible, if it is not to be vulnerable to competitive challenge. I am responding to that request.
The international health care plan to be made available pursuant to the legislation will be based on an agreement between the board and a major international insurer. It will be a matter for the board to negotiate the necessary agency arrangements, practical and financial, with the insurer concerned.
The international health care plan will be available to people who intend to live and work outside the jurisdiction for periods of typically more than six months and up to five years. The plan's main features will be medical insurance cover, evacuation and repatriation services and medical assistance services. As the plan's principal purpose will be insurance against the cost of health care delivered outside the State, it will not be subject to the provisions of the Health Insurance
Act, 1994, which requires,inter alia, that premiums be community rated.
People currently insured with the VHI will be able to transfer to the international health care plan without waiting periods or pre-existing illness restrictions, provided they have served out the restrictions applicable under their existing cover. They will be transferred back to their former VHI plans on the same terms when they return to Ireland. The VHI will market the international health care plan through its existing group scheme network and it will be available to both group and individual members. This aims to be a particularly customer-friendly arrangement for people who must reside outside the State from time to time in connection with their employment.
The Bill is specific in nature and does not attempt to deal with issues other than the requirements of the board regarding its capacity to offer an international health care plan. My Department is preparing a White Paper on private health insurance which will address the broader issues. In accordance with commitments contained in the Government's action programme, the White Paper will address the options open in relation to the VHI's future, including the question of a strategic alliance. I have made it known on a number of occasions that all options are being considered in relation to the most appropriate status and corporate structure for the VHI into the future. This matter has been the subject of extensive consultation between officials of my Department and senior management of the VHI.
The Bill reflects the necessity of ensuring the VHI can function competitively in a particular area of business and that it is not disadvantaged,vis-à-vis competitors, in relation to a growing segment of the market. As well as meeting specific customer demands, the capacity to make available an international health care plan will ensure the VHI is equipped to consolidate its existing business in the corporate sector by putting it on the same footing as other insurers which can offer plans of the kind involved.
The provisions of the Bill will enable the board to offer a necessary product in a developing and demanding market. The product in many ways reflects this country's growing international outlook. It was not possible to envisage that the board would be required to offer such a product when the 1957 Voluntary Health Insurance Act was framed. It reflects the pace of change in the private medical insurance market since the passing of the Voluntary Health Insurance (Amendment) Act, 1996, brought about by opening the market to competition and is an indication of the benefits which competition can bring to consumers. I commend the Bill to the House.