I am grateful for the opportunity to ask the Minister his intentions regarding the review group report on the VHI. Many of the 1.3 million customers of the VHI are very concerned about recent reports confirming massive underwriting losses this year. The VHI is reduced to selling off some of its financial investments to bridge the revenue gap and it expects to lose £15.5 million this year on its core insurance business.
The company's plans to counter the £15.5 million underwriting loss with investment of £12 million are unlikely to be realised and the projected net loss of £3.5 million will turn out to be much greater. As many of us have already seen a copy of the special review group report. The Minister should publish it immediately so that customers and investors in the VHI can assess the position for themselves. He should also spell out immediately his plans for the VHI as it faces the introduction of competition in its core health insurance business under the terms of the European Single Market.
The report warns of the possible loss of subscribers to the VHI in view of the fact that since 1991 the entire population has been entitled, without significant charge, to public hospital services and free consultant services. It also points out that this year's budget began a phased reduction, from 48 per cent to 27 per cent, over three years of tax relief on VHI premiums. Added to the danger of a negative subscriber reaction is the recent 9 per cent price rise.
Identifying the need for the VHI to operate to a clear commercial mandate, the report calls for the company to cease being an executive agency of the department of Health. It also identifies the necessity for a culture of innovation, imagination and customer responsiveness to be urgently introduced into the VHI organisation. The review group recommends that the VHI should be on an identical footing with possible private sector competitors in regard to all aspects and dimensions of industry regulation.
The report also warns that while the VHI may not face immediate competition under the European Union's deregulated market, it is likely that at some stage in the near future it will face competition in part or all of its core markets. It states that income must be increased by increasing premiums and/or increasing membership and that expenditure growth must be curtailed by reducing the extent of benefits provided and/or reducing the cost of such benefits.
I call on the Minister to tell to the House whether he accepts the findings of the report, whether he intends to implement them and whether he intends to publish the report to make members of the VHI aware of the company's position.
