Dáil Éireann debate -
Thursday, 9 Oct 2003

Vol. 572 No. 2

Written Answers. - Health Insurance.

Pat Rabbitte

Question:

42 Mr. Rabbitte asked the Minister for Health and Children the Government's proposals for the future of VHI; the basis on which he decided to sanction the recent 8.5% increase in VHI premiums; if his attention was drawn to, when he approved the application, the fact that the company was on course to report record profits of almost ?80 million for the two year period leading up the February 2004; and if he will make a statement on the matter. [22531/03]

Minister for Health and Children (Mr. Martin)

Consideration of the future corporate status of VHI is ongoing in my Department.

The setting of premium charges is the responsibility of the VHI board. The legislation requires the board to set premiums at a level sufficient to cover costs and make proper allowance for reserves. The board is, however, obliged to notify the Minister in advance of putting proposed increases into effect. The Minister may prevent the introduction of an increase, but must give reasons for doing so.

Figures provided by the VHI board in support of its premium increase included financial details, that incorporated projected profits. It should be noted that the premium increase, which took effect from 1 September in respect of renewals and new policies effected from that date, will not impact significantly on the out-turn for the finan cial year ending February 2004, but is critical when looking at the following years.

Information on future trends in claims, which VHI will have to meet on behalf of members, is pivotal when considering the need for premium increases. The percentage increase in premiums implemented was considered by the VHI board to be the minimum necessary, given a higher percentage increase in projected claims costs. The board, as an insurer, must maintain sufficient reserves to pay claims as they fall due. Due to historically low profits, the board's solvency ratio is below what would be generally acceptable in the industry, though it has improved in recent years.

Question No. 43 answered with Question No. 16.